The Legal Theory
The class action lawsuit against JPMorgan argued that the bank knowingly or recklessly maintained a banking relationship with Jeffrey Epstein despite clear red flags indicating he was running a sex trafficking operation. The theory: the financial infrastructure the bank provided enabled the trafficking.
The Internal Red Flags
Evidence in the case showed that JPMorgan compliance officers and senior executives had noted concerns about Epstein’s account including unusual cash withdrawals characteristic of payments to victims. The bank did not terminate the relationship until 2013.
The Million Settlement
In June 2023, JPMorgan agreed to a million class action settlement. The settlement did not include admission of wrongdoing.
The Jes Staley Connection
Former JPMorgan CEO Jes Staley maintained a personal friendship with Epstein that was later scrutinized by UK financial regulators. Staley was a senior JPMorgan executive during the period Epstein maintained his account.
The Broader Banking Accountability Theory
The JPMorgan settlement established a legal theory applicable to other financial institutions: banks that maintain accounts for trafficking operations despite red flags can face liability for enabling the crimes.