JPMorgan "Pays" but barely. $1.7 billion is nothing out of $100 billion in annual revenue and $2.5 trillion in assets.
I have no problem with JPM shorting or otherwise taking advantage of this fraud. Given that the SEC is asleep at the switch, the shorts are the best way to protect the financial system.
How is that not profiting from crime?
That's profiting from crime, in a way, but it's all you can do when it's not within your power to subpoena Apple internal memos or what have you.
As I read this article, this is more or less this is what JPM is being punished for doing, because in theory the small exotics group in the UK could have called the US headquarters and inspired them to contact the SEC, which didn't happen.
Your crimes aren't magically washed away because the SEC wasn't doing their job well.
Now, you seem to think that there should be communication between a trading desk and Madoff's custodian. Any compliance officer would disagree. There is simply too much risk of front running the client's account to allow this (especially when the account is as large as Madoff's).
Err... If you're thinking about the handful of self-proclaimed "activist investors" who frequently end up massively short after "investigating" the stocks they abandon, please spend some time reading http://www.deepcapture.com. You'll find their names in rather dubious company -- including Madoff, incidentally -- and associated with mountains of illegal activity.
I know generally you can just start selling low or whatever, but shorting would make you a huge profit if this worked while selling low potentially a loss?
A good place to start is http://www.deepcapture.com/the-story-of-deep-capture-by-mark... or http://www.deepcapture.com/category/1-the-players/
edit: changed starting suggestions because the website is confusingly laid out and some links don't seem to work.
It should be whatever the law says it should be.
In an ideal world... it should be in proportion to the pain and suffering caused by JPM's "willfully" (as concluded by investigators) failing to adhere to its legal obligations to report on Madoff's activities, once it became aware of them internally. Perhaps then some, given obvious indifference (on the part those responsible at JPM) to the potential for harm caused to unsophisticated investors while they were busy looking covering their... annual bonuses.
Quoting from yesterday's NYT article[1]:
On two occasions, in 2007 and 2008, JPMorgan’s own computer system raised red flags about Mr. Madoff, according to prosecutors. But both times, prosecutors say, JPMorgan employees “closed the alerts.”
“JP Morgan failed to carry out its legal obligations while Bernard Madoff built his massive house of cards,” George Venizelos, a senior F.B.I. official, said in a statement. The F.B.I. and prosecutors traced the problem to JPMorgan “willfully” failing to create sufficient controls against money laundering. “There was no meaningful effort by the Bank to examine or investigate the Madoff Securities banking relationship,” prosecutors said.
The fact that the SEC was also asleep at the switch does not in any way absolve JPM of its own culpability in this disaster.
Even so, in human terms, the worst of the penalties "suffered" by anyone at JPM is unlikely to begin to compare to the losses suffered by Madoff's non-institutional investors as a result of JPM's actions.
[1] http://dealbook.nytimes.com/2014/01/07/jpmorgan-settles-with...
Also: the actions for which JPM was recently fined concern primarily the years 2007 and 2008. JPM may have acted differently in the 1990s, but that's practically irrelevant to what happened ten years later -- especially given the extent to which the size, and the number of unsophisticated investors lured into Madoff's scheme (with JPM's help) increased geometrically.
Similarly, whether they reported him to British banking authorities is also of little relevance. U.S. laws concern JPM's obligations to report suspicious activities to the SEC and other domestic agencies -- not the Brits.
Should firms be required to report any suspicious activity found by any team in any location to every regulator that covers them ?
(generally the rule at most banks is to report it to the legal team who then figures out who should be notified)
Don't know about "any activity, any location", but the SEC's position is that JPM failed to report specific activities to U.S. Treasury's enforcement unit (FinCEN), as per the requirements of its charter.
If you need more clarification as this finding, you might want to look into the court documents.
No, that's not what they were fined for. They were fined for not doing their job, according to the Bank Secrecy Act. Which they agreed to comply with when they decided to become a bank.
You might want to read a couple of news articles about the case, before pulling "facts" out of the air like this.
Which in this case was also the SEC's job... Your statement doesn't contradict refub's
Don't complicate the tax code even further making it start taxing losses.
(One fair point might be if they paid capital-gains rates or foreign taxes in Ireland or something on the gains from shorting Madoff and yet could deduct the judgment from full US taxes. I don't think that was the case.)
This is the problem. "They" made billions of dollars illegally. Now, "they" are paying back 1.7 billion dollars. The question is- is it still the same "humans" behind the pronoun?
Certainly Madoff is not paying the lifetime of fuck-you money he has blown. At least now he is in jail (or "camp" as he thinks of it).
The rest of "them" wont do a single day in prison.