Large institutions in a position to help stem investment fraud have, in our opinion, both an ethical and financial responsibility to do so. Institutions, such as JP Morgan Chase, where the primary Madoff banking account was held, have a responsibility to know their customer, monitor the activities of these accounts and do appropriate levels of due diligence, particularly in light of certain suspicions (“red flags”) harbored and circulated. Regular investors, even personal friends of the Madoff family, on the other hand, would probably have had no such knowledge or suspicion, unless they were receiving unusually high rates of return or other accommodations. NIAP has filed an Amicus Brief regarding the JP Morgan Chase case in the District Court.
