JPMorgan Chase & Co. will pay as much as $290 million to victims of sex trafficker Jeffrey Epstein under the terms of a proposed settlement agreed Monday. But this payout is far from the end of the bank’s reckoning over a relationship it now says it deeply regrets.
This is a big settlement, and an unusual one in that, in effect, it makes JPMorgan accountable for the crimes of a client, although the bank will not admit or deny liability as part of the settlement, according to a person familiar with the wording who didn’t want to be named because the full terms aren’t yet public. Banks are regularly fined for not doing enough to ensure they don’t work with dodgy customers, or having weak defenses against money laundering, but it is extremely rare for any to be punished for the drug dealing, terrorism or other felonies of bad actors.
The US bank’s payout, if approved by the US District Court in New York, will go to potentially more than 100 victims in a class action suit led by an anonymous Jane Doe, according to the New York Times. It is almost four times the $75 million that Deutsche Bank AG agreed to settle a similar suit in May. JPMorgan had Epstein as a client for 15 years, compared with Deutsche Bank’s five years, and its relationship covered the years when some of Epstein’s worst behavior occurred, according to the claims of authorities and victims. The number of parties to the Deutsche Bank settlement isn’t yet known.
The money is almost double what JPMorgan was expected to pay in total to end both this lawsuit and a second one bought against the bank by the US Virgin Islands, where Epstein lived for many years, according to estimates from Elliott Stein of Bloomberg Intelligence. That second suit is turning into a vicious fight after JPMorgan countersued the territory, claiming members of its government helped Epstein in multiple ways, including through valuable tax breaks and light monitoring of him as a registered sex offender. JPMorgan declined to comment on the USVI case, while the territory’s attorney general told Bloomberg News it would continue its battle against the bank.
JPMorgan is also suing Jes Staley, who was close to Epstein and formerly ran JPMorgan’s asset management arm and later its investment bank. Staley left in 2013 and later became chief executive officer of Barclays Plc in the UK. He resigned from that post in 2021 after UK regulators decided he had not been as open as he should have been about his relationship with Epstein while at the US bank. Staley has previously denied any knowledge of Epstein’s sex crimes.
Jamie Dimon, the US bank’s chairman and CEO, has used many interviews to apologize to Epstein’s victims and say how much the bank regrets ever doing business with him, though he has always maintained JPMorgan had committed no crime. In a statement on Monday, the bank said it would never have continued to do business with Epstein if it believed he was using the bank to help commit heinous crimes.
But the case has advanced this far and the settlement is this large because evidence suggests that JPMorgan should have done more to act on the concerns of some senior employees. This is no normal “know your customer” failing or having too lax controls for money laundering. Evidence in the lawsuits and in a deposition of Dimon that was made public this month referred to many red flags that could have prompted the bank to cut off Epstein sooner, or do more to interrogate suspicious financial behavior.
The bank’s own top lawyer at the time, Stephen Cutler, twice emailed other senior staff in July 2011 to say that Epstein should not be a client, according to the deposition. In the same year, the bank was allowing Epstein to withdraw between $20,000 and $40,000 in cash per month. There were other potential red flags, too.
When the courtroom battles are over, JPMorgan will have to explain to its investors and others how and why it failed to act more decisively at the time and what it has done to improve its processes in the decade since it fired Epstein as a client. Dimon promised lawyers quizzing him during his deposition that he would update them in the future about specific measures it has taken against sex trafficking. Sigrid McCawley, lawyer for the plaintiffs, said in a statement that the settlements showed “financial institutions have an important role to play in spotting and shutting down sex trafficking.”
For now, JPMorgan is still embroiled in its high-stakes fights with Staley and the USVI. All three parties have plenty more to lose in reputation and financial terms if these battles go to court and more evidence is publicly examined.
JPMorgan is doing the right thing in the most important area: paying real money to help compensate women who suffered Epstein’s abuses. But it has a long way to go to really put this case behind it.
Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance. Previously, he was a reporter for the Wall Street Journal and the Financial Times.