It has been a pretty good couple of days for Madoff victims.
J.P.Morgan Chase reached a $2.05 billion settlement with federal prosecutors over its failure to properly exercise oversight of Bernard Madoff and his operations; $1.7 billion of that is expected to go directly to Madoff victims.
And that’s not all: the big bank additionally has agreed to pay about $543 million to settle claims brought by Madoff Trustee Irving Picard and a separate civil lawsuit.
In a statement, Picard said that J.P.Morgan approached him several months ago seeking a negotiated resolution.
These payments, subject to court approval, will settle the avoidance claims asserted by Picard against JPMorgan for $325 million, as well as common law claims brought separately by the Madoff trustee and in a class action lawsuit for $218 million. Picard’s original complaint was filed in December 2010.
Of the $325 million that the bank will pay to Picard, $50 million will be given to the joint liquidators of the Fairfield Sentry Funds for distribution to the indirect investors in the Fairfield Sentry Funds, as part of an agreement reached in May 2011 to share a percentage of certain future recoveries.
The settlement of the common law claims was jointly entered into by Picard and the class action representatives, Paul Shapiro and Stephen and Leyla Hill, who filed two related common law class actions against J.P.Morgan, which later were consolidated.
If this settlement is approved, the settlement class will consist of Madoff customers who had capital directly invested with Madoff and had net losses, regardless of whether they filed a claim in the liquidation proceeding.
Court rulings denying Picard’s standing to bring common law causes of action led to the filing of the class action. Picard appealed to the U.S. Supreme Court on his right to bring common law claims against major financial institutions on October 8, 2013. As part of the settlement, he agreed to withdraw the petition in the J.P.Morgan case. Regardless of the outcome of that appeal, Picard’s counsel David J. Sheehan said, Picard’s bankruptcy claims of approximately $3.5 billion remain outstanding against HSBC, UBS and Unicredit. Absent additional settlements, those cases will advance through the judicial process, he added.
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