US stock market daily report (January 06, 2014, Monday)
January 7, 2014, Tuesday, 07:28 GMT | 02:28 EST | 11:58 IST | 14:28 SGT
On the Comex division of the New York Mercantile Exchange Monday, February gold futures sank by $30 on a trade of nearly 4,200 contracts around 10:14 am ET, triggering a 10-second trading halt. Gold market watchers blamed the move on everything from a “fat finger” to trader liquidation to price manipulation. Gold price fell from around $1,245 to around $1,215 an ounce. Time will tell whether the U.S. Commodity Futures Trading Commission and exchange will investigate and try to actually enforce its regulations.
JPMorgan to Pay Up on Hand in Madoff Ponzi Scheme
Red flags revealed in a recent civil suit against JPMorgan Chase & Co. (JPM-NYSE) included a 2008 memo which was sent shortly before Madoff's arrest - that he could be running a Ponzi scheme. Former JPMorgan client relationship manager Richard Cassa testified that he previously supervised Madoff's account but had little knowledge about the investment advisory business and that there were "probably tens of millions" of dollars in Madoff's account during his tenure.
As early as Tuesday, JPM is expected to pay nearly $2 billion in civil and criminal settlements to settle government suspicions that the global bank ignored signs of Bernard Madoff's massive Ponzi scheme. Madoff kept his main checking account with the New York-based JPMorgan for decades and is now serving a 150-year prison term after pleading guilty to fraud and other charges in March 2009, without standing trial. Currently in Manhattan Federal court, five former Madoff employees are on trial for knowingly participated in the Ponzi scheme however, they have plead not guilty saying they were hoodwinked by their ex-boss.
While authorities aren't likely to single out any one person at JPMorgan for blame, federal regulations do require banks to report suspicious activity, by their account holders. Including this settlement and over the past 12 months, JPM has paid $20 billion to settle government investigations. New York U.S. Attorney's office, U.S. Treasury Department and Office of Comptroller of the Currency is working with JPM on payment arrangements. The pending settlements are expected to include a deferred-prosecution agreement that would require JPMorgan to acknowledge the findings of federal investigations and beef up the bank's internal monitoring procedures. JPM's involvement with legal issues revolving around Madoff won't end with this settlement.
Court-appointed trustee Irving Picard is trying to recover funds from the Madoff fraud for investors. Picard filed a petition in the U.S. Supreme Court, seeking authorization to pursue financial recovery from JPMorgan and several other banks. Madoff trustee has several U.S. Bankruptcy Court actions pending against JPMorgan as well as other banks collectively involving an estimated $4 billion in recovery claims. Amanda Remus, a spokeswoman for Picard said Monday any agreement between JPMorgan and Department of Justice "would be independent" of the trustee's claims against the bank.
Madoff's Ponzi scheme bilked investors out of over $17 billion. The bulk of the expected financial settlement is expected to go toward helping repay the thousands of investors, celebrities, charities and others. To date nearly $11.9 billion of the total amount, has been recovered.