JPMorgan Exited Madoff-Linked Funds Last Fall

[depakid]

Source: NY Times


Bernard Madoff arrived at court on Jan. 14. Months before Mr. Madoff’s arrest, JPMorgan Chase took money out of hedge funds linked to him.
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JPMorgan Chase says that its potential losses related to Bernard L. Madoff, the man accused of engineering an immense global Ponzi scheme, are “pretty close to zero.” But what some angry European investors want to know is when the bank cut its exposure to Mr. Madoff — and why.

As early as 2006, the bank had started offering investors a way to leverage their bets on the future performance of two hedge funds that invested with Mr. Madoff. To protect itself from the resulting risk, the bank put $250 million of its own money into those funds.

But the bank suddenly began pulling its millions out of those funds in early autumn, months before Mr. Madoff was arrested, according to accounts from Europe and New York that were subsequently confirmed by the bank. The bank did not notify investors of its move, and several of them are furious that it protected itself but left them holding notes that the bank itself now says are probably worthless. A spokeswoman, Kristin Lemkau, said the bank withdrew from the Madoff-linked funds last fall after “a wide-ranging review of our hedge fund exposure.” Ms. Lemkau acknowledged, however, that the bank also “became concerned about the lack of transparency to some questions we posed as part of our review.”

Investors were not alerted to the move because, under sales agreements, the issues did not meet the threshold necessary to permit the bank to restructure the notes, she said. Under those circumstances, she added, “we did not have the right to disclose our concerns.”



Read more: http://www.nytimes.com/2009/01/29/business/29madoff.html?_r=1

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Coincidence or fraudulent conveyancing?

[dkf]

1. That doesn't look good for JPM.

Ethics ethics ethics.

[Cassandra]

2. They may still have to give it back...

as others are having to do.

[depakid]

3. That's a possibility

Tell you what- securities law and forensic accounting are going to be growth industries.

[NashVegas]

5. If They *Made* Money, Yes

[Cassandra]

9. Even if they are, essentially, withdrawing ...

their principle, it may not matter if they are in the middle of a fraud where the money to repay them was from other people's funds who were promised investment income.

[NashVegas]

11. You Can Try Making a Case

But I can't believe there's an appeals court that would agree someone should held liable, against their own principle, for simply being quicker on the draw.

[Cassandra]

14. A friend knows someone who withdrew money...

from Madoff several years ago and bought an apartment and he has been informed he has to return the money. Apparently, there is a 6 year statute of limitations.

[Lucky Luciano]

4. COuld easily be a coincidence...

Many many investors were pulling money from hedge funds at the time - particularly after Lehman filed at the end of the summer.

[NashVegas]

6. People Who Want to Believe ...

Will.

I used to have a 401(k) account. When certain things about the investment company made me think they were amateurs, I wanted to pull out. Our comptroller talked me into staying put because 'if we have a good year, the owner might match, blah blah blah, free money! Really, you should think about it ...' Because he was the one with the CPA button and I wasn't, I listened.

Bad move. It's all gone now.

I'd guess someone at Merrill had seen one red flag too many, for whatever reason, but not enough to justify alerting others.

[CoffeeCat]

7. I'm sure this scandal has many tentacles...

...and I doubt Madoff lives to tell the story.

[Celebration]

8. Well if JP Morgan just pulled out last fall

The funds will probably be subject to recall by the bankruptcy court. (I would guess?) If they call $250 million close to zero, I wish they would give me zero.

[FarCenter]

10. Not necessarily, JPM went in and out of Fairfield Grenwich, not Madoff

JPM invested in Fairfield Greenwich in order to lay off risks on derivatives written on Fairfield Greenwich hedge funds.

The Fairfield Greenwich hedge funds invested with Madoff, so JPM is one step removed from Madoff.

Although, there will certainly be litigation.

[Celebration]

12. oh, man, will there ever be n/t

[Hannah Bell]

13. weird stuff....

Did Fairfield Greenwich Screw Over Would-Be Inauguration Goers?

http://clusterstock.alleyinsider.com/2009/1/did-fairfield-greenwich-screw-over-would-be-inauguration-goers


noel got taken to court in an undocumented worker case, too...

noel = bush/republicn donor:

http://www.newsmeat.com/fec/bystate_detail.php?last=Noel&first=Walter

nothing good comes from connecticut, ancestral home of half the us elite

[Vinnie From Indy]

15. Gee, I'm shocked JP Morgan would screw the average schmoe customer

In fact, it would be more shocking to find an honest Wall Street firm than not.