A major Wall Street bank has again been penalized for breaking the law without any executives being prosecuted.

This time it was JPMorgan Chase, which was charged with two felony violations of the Bank Secrecy Act for helping Bernie Madoff with his Ponzi scheme that cheated thousands of investors out of their money.

JPMorgan Chase’s relationship with Madoff went back to 1986. Madoff Securities had numerous checking and brokerage accounts at the bank, which noticed in the early 1990s that Madoff was conducting transactions that resembled check-kiting.

“Another bank involved in these transactions (“Madoff Bank 2”) recognized them as suspicious and without any legitimate business purpose,” according to the Corporate Crime Reporter, which noted that Madoff Bank 2 filed a suspicious activity report with law enforcement and closed down Madoff’s account.

JPMorgan Chase did no such thing, and actually got further involved with Madoff when he moved all of his accounts from Madoff Bank 2 to JPMorgan Chase.

In total, JPMorgan Chase spent decades helping Madoff rip off people who trusted their money with him.

For that, JPMorgan Chase received a deferred prosecution agreement from Preet Bharara, the United States attorney in Manhattan. It will pay a $2.6 billion penalty. Of the total, $1.7 billion will go to the Justice Department, $543 million will go to Irving Picard, who sued JPMorgan on behalf of Madoff’s victims, and $350 million will go to the Office of the Comptroller of the Currency.

JPMorgan also agreed to “accept responsibility” for its conduct and stipulate for a statement of facts. As long as the bank behaves and abides by the agreement for the next two years, it won’t be prosecuted, after which the charges will be officially dismissed.

Dennis Kelleher of Better Markets, a nonprofit that promotes financial reform in the domestic and global capital and commodity markets, said the agreement was “good,” but also “inadequate to stop what can only be called a one-bank crime spree.”

“First, once again, not a single individual working for JPMorgan Chase has been held accountable. Banks do not commit crimes; bankers do. Until individuals, including executives, are held personally liable, fined and jailed, the crime spree will continue,” Kelleher told the Corporate Crime Reporter.

The penalty of $2.6 billion might seem significant, but not in the following context: Wall Street analysts estimate JPMorgan Chase will earn as much as $23 billion in profits this year, more than any other bank.

-Noel Brinkerhoff

To Learn More:

JPMorgan to Pay $2.6 Billion for Failing to Report Madoff Concerns (by Walter Hamilton and Stuart Pfeifer, Los Angeles Times)

JPMorgan Chase Gets Prosecution Deferred (Corporate Crime Reporter)

JPMorgan Chase Deferred Prosecution Agreement (U.S. Department of Justice)

Steep Penalties Taken in Stride by JPMorgan Chase (by Peter Eavis, New York Times)

JPMorgan Could Pay All-Time Record Penalty of $13 Billion for Mortgage Fraud (by Noel Brinkerhoff and Danny Biederman, AllGov)

JPMorgan to Pay $410 Million in Enron-Like Scheme, but Admits Nothing while Execs Go Free (by Ken Broder, AllGov)