A federal appeals court ruled on Wednesday that JPMorgan is not liable to a group of former clients of Bernie Madoff who blamed the bank for taking an active role in his Ponzi scheme while ignoring subsequent red flags from the scandal.

The 2nd U.S. Circuit Court of Appeals in Manhattan upheld the earlier ruling by federal judge John Koeltl who, in 2016, ruled that JPMorgan was, at most, negligent in its dealings with Madoff.

The suit was brought against JPMorgan by about 2,500 so-called "net winners" who withdrew more money from their accounts at Bernie Madoff & Co. - aka Bernard L. Madoff Investment Securities LLC - than they invested. These investors felt that their claims were undervalued in the liquidation of Madoff’s firm.

FINANCIALISH COMMENTS.     Time has not changed our opinion that JPMorgan was grossly negligent in its relationship with master Ponzi schemer, Bernie Madoff. Yes, some years back JPMorgan anted up $2.4 billion to settle litigation related to Madoff and, yes, the bank acknowledged its responsibility for failing to stop Madoff in a settlement with the federal government.

That said, JPMorgan’s ‘do nothing, say nothing’ approach to Bernie Madoff has never been fully explained – or, for that matter, fully investigated (to our satisfaction – although, who are we in this matter). After all, how could a custodian that presumably held billions of dollars for an investment advisor or a broker-dealer not investigate suspicious activities – or in this case, suspicious INACTIVITIES. Once red flags were noted, it seems probable that the bank would have some basis for concern, which it probably would have shared with regulators.

Unfortunately, little, if any, light has been shed on JPMorgan’s handling of Madoff’s billions. Of course, why would a banker wish to “upset the apple cart’, when such a relationship brings in hundreds of millions in fees and other revenue to the bank?  [See Financialish, 3/4/11] 

And so, with today’s ruling, another chapter in this sordid financial scandal ends. RIP.