NEW YORK, July 23 A U.S. federal judge on
Wednesday dismissed a shareholders' lawsuit claiming JPMorgan
Chase & Co board members knew about Bernard Madoff's
Ponzi scheme and ignored red flags signaling his massive fraud.
The lawsuit filed in February alleged that Chief Executive
Jamie Dimon and 12 other current and former executives and
directors turned "a blind eye to Madoff's thievery."
The claims were based partly on statements Madoff gave in a
series of interviews - including conversations with plaintiffs
lawyers while in federal prison in North Carolina - about his
interactions with the bank. Madoff was an important client of
the bank for two decades.
Judge Paul Crotty ruled there were not enough specific facts
to prove the board breached their duties to shareholders.
"Any alleged red flags are insufficient to demonstrate bad
faith on the part of the outside directors," Crotty wrote in his
JP Morgan spokeswoman Kristen Chambers said the bank
declined to comment. An attorney for the plaintiffs did not
immediately respond to a request for comment.
The lawsuit, filed in New York federal court, was brought by
the Steamfitters Local 449 Pension Fund in Pittsburgh and
Central Laborers' Pension Fund in Jacksonville, Illinois, both
shareholders of JPMorgan.
The action came after JPMorgan agreed to pay $2.6 billion to
settle other lawsuits over its Madoff dealings.
In those accords JPMorgan entered a "deferred prosecution
agreement," or DPA, to resolve criminal charges, under which the
bank acknowledged its responsibility for failing to stop Madoff
before his scheme surfaced publicly in December 2008.
Madoff, 76, is serving a 150-year prison term after pleading
guilty to fraud in March 2009.
The case is Central Laborers' Pension Fund et al v. Dimon et
al, U.S. District Court, Southern District of New York, No
(Reporting by Mica Rosenberg and Jonathan Stempel; Editing by