People in Texas and throughout the country were affected by Bernard Madoff's Ponzi scheme several years ago, but on May 18, a judge dismissed a suit by investors who attempted to sue JPMorgan Chase & Co. for Madoff's actions. The suit, which was filed in New York, stated that the company had profited from doing business with Madoff while ignoring red flags. However, the judge ruled that the investors had waited too long to file the suit and that there was insufficient evidence of JPMorgan's control of Madoff's activities.
It is one of several lawsuits the bank has faced in connection with Madoff. It also paid $350 million for not reporting Madoff's actions and $1.7 billion to settle government charges. A further $500 million was spent on other litigation.
The lawsuit had been brought by around 2,500 former Madoff customers. However, the judge stated that JPMorgan employees were at worst negligent rather than fraudulent.
As this case demonstrates, business litigation can be costly and may range from dealing with fraud to contract breaches. In a complex case like this one with so many people and entities involved, it can be difficult to prove the responsibility of various parties. For a business that has lost money following illegal actions by another business or individual, pursuing a civil lawsuit may be one way to try to recover those lost assets. A company that is in such a situation might want legal counsel as to how best to proceed. Considerations may include how much time has passed, where responsibility can be proven and which entities would be able to pay in the event of a successful lawsuit.
Source: Bloomberg, "JPMorgan Investor Suit Tied to Madoff's Fraud Is Dismissed," Patricia Hurtado and Erik Larson, May 18, 2016