Jan 4 The Treasury Department watchdog ordered
JPMorgan Chase & Co to work with U.S. regulators seeking
documents in connection with a probe into the bank's
relationship with convicted Ponzi schemer Bernard Madoff, in a
warning letter dated Dec. 21.
The letter from Treasury Inspector General Eric Thorson to
JPMorgan's general counsel, Stephen Cutler, which was reviewed
by Reuters on Friday, revealed that the Office of the
Comptroller of the Currency has been unable to get documents it
JPMorgan has argued it does not have to turn over certain
kinds of documents to the OCC because it would impinge on its
attorney-client privilege rights, according to the letter.
Thorson told the bank his office would not accept that
argument and ordered JPMorgan to tell his office by Jan. 11 how
it would resolve the dispute with the OCC.
"The OCC could not do its work and carry out its authority
under its examination statute...if that statute was interpreted
or operated to bar access to bank records for which a claim of
privilege was made," Thorson said in the letter, which was first
reported by Bloomberg.
Thorson said the OCC referred the matter to the inspector
general's office to determine whether JPMorgan was impeding the
regulator's national bank oversight program. The OCC is an
independent regulator within the Treasury Department.
The letter did not say what kinds of documents the OCC is
seeking or give more detail about the bank regulator's
investigation into JPMorgan.
A spokesman for the OCC declined to comment on Friday.
"This dispute does not go to the merits of the matter," said
JPMorgan spokeswoman Jennifer Zuccarelli. "But it does raise an
important issue of principle: whether we and other banks - large
and small alike - have the fundamental right, long recognized in
this country, to communicate freely with and seek confidential
guidance from their lawyers.
"We will of course continue to work together with our
regulators on this matter," Zuccarelli said.
Madoff was convicted in 2009 of defrauding thousands of
investors and is serving a 150-year prison sentence.
Irving Picard, a trustee for Madoff's victims, has accused
JPMorgan of ignoring warning signs that Madoff's business was a
fraud and has attempted to sue the bank.
A judge found that the trustee lacked power to bring claims
against the bank for harm to former Madoff customers, tossing
out all but $425 million of Picard's $19.9 billion lawsuit
The bank has said there was no showing that anyone there
knew of Madoff's elaborate scheme.
Picard is in the process of appealing the ruling.