NEW YORK, June 12 (Reuters) – JPMorgan Chase ( JPM.N ) has agreed to pay about $290 million to settle a class action lawsuit by victims of Jeffrey Epstein, resolving a large portion of the litigation on the bank’s relationship with the disgraced financier.
Monday’s settlement follows months of embarrassing revelations that JPMorgan ignored internal warnings and ignored red flags about Epstein as he became a valuable client.
Epstein was a JPMorgan client from 1998 to 2013 and was retained even after being arrested in 2006 on prostitution-related charges and pleading guilty two years later.
Monday’s settlement will resolve claims against the largest US bank by potentially more than 100 victims, led by a former ballet dancer known as Jane Doe 1, who said Epstein abused them when they were young women. and teenage girls.
Epstein killed himself at age 66 in a Manhattan jail cell in August 2019 while awaiting trial on sex trafficking charges.
“The bank may not want it to stay in the press,” said Carliss Chatman, a professor at Washington and Lee University School of Law in Virginia. “At a time when Americans are questioning the banking system, linking Chase to human trafficking is not good for business.”
Davia Temin, chief executive of crisis management firm Temin and Co, said settling rather than fighting to the end sends “the right message to all of Wall Street.”
The civil suit settlement requires approval by US District Judge Jed Rakoff in Manhattan.
“Any association with (Epstein) was a mistake and we regret it,” JPMorgan said in a statement. “We would never continue to do business with him if we believed he was using our bank in any way to help commit heinous crimes.”
Monday’s settlement came 3-1/2 weeks after Deutsche Bank ( DBKGn.DE ), where Epstein was a client from 2013 to 2018, agreed to pay $75 million to end a similar lawsuits by Epstein victims.
“The Deutsche Bank settlement … probably created momentum,” said Adam Zimmerman, a law professor who recently accepted a position at the University of Southern California. “A settlement with Epstein’s victims frees JPMorgan to begin turning the page and changing the narrative.”
The $290 million figure was confirmed by David Boies, a lawyer for Epstein’s victims.
JPMorgan did not admit wrongdoing in agreeing to settle, according to a person familiar with the matter, who spoke on condition of anonymity.
“The settlements indicate that financial institutions have an important role to play in identifying and shutting down sex trafficking,” Sigrid McCawley, an attorney for victims in both lawsuits, said in a statement.
POINTING THE FINGER
JPMorgan still faces a lawsuit by the government of the US Virgin Islands, where Epstein owns two nearby islands and is suspected of abusing victims at his mansion.
It also sued former executive Jes Staley for shepherding Epstein’s relationship with the bank and hiding what he knew about his former friend.
JPMorgan wants Staley to cover its losses in both lawsuits and forfeit eight years of salary.
Last month, Rakoff said JPMorgan could hold Epstein’s victims liable if they could show Staley that Epstein had first-hand knowledge that Epstein ran a sex-trafficking enterprise.
Staley left JPMorgan in 2013 and later became chief executive of Barclays ( BARC.L ) for six years.
He testified under oath Saturday, two weeks after JPMorgan Chief Executive Jamie Dimon, in his own deposition, denied discussing Epstein’s accounts.
In a statement, the US Virgin Islands said it “will continue its enforcement efforts to ensure full accountability for JPMorgan’s violations of the law.”
The territorial case is Epstein’s largest yet, following civil charges against his estate and the conviction of ex-girlfriend Ghislaine Maxwell for aiding and abetting his abuses. Maxwell is appealing his conviction and 20-year prison sentence.
Attorneys for Staley did not respond to requests for comment.
Staley said she regretted being friends with Epstein but denied knowing about his sex trafficking. It was unclear whether his June 10 deposition was a factor in Monday’s settlement.
“Chase’s defense is that Staley is a lone wolf and it’s not Chase’s culture, but more evidence is coming out that it may be harder for Chase to point the finger at him,” Chatman said.
Another key JPMorgan executive who has been the focus of the litigation is Mary Erdoes, its asset and wealth management chief.
Epstein’s victims have described him in court filings as a key defender of keeping Epstein as a client, including after former general counsel Stephen Cutler told him and Staley in 2011 that the bank should terminate the relationship.
Dimon said in his deposition that Cutler had the authority to override Erdoes and Staley and fire Epstein. Cutler was not immediately available for comment Monday.
“While we regret any association with Jeffrey Epstein, we would not have continued to do business with him if we believed he was using our bank to commit heinous crimes,” a JPMorgan spokeswoman said when asked about with the involvement of Erdoes. “In fact, Mary Erdoes and others dropped him as a client six years before he was charged with human trafficking.”
Reporting by Nupur Anand, Lananh Nguyen, Saeed Azhar, Luc Cohen, Jonathan Stempel, Tatiana Bautzer in New York; Editing by Megan Davies, Alexander Smith, Grant McCool and Lisa Shumaker
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