While many other countries mandate that publicly-traded companies rotate their audit firms after a maximum number of years, there is no such requirement in the United States at the present time.
The 10-K (annual report) that JPMorgan Chase filed with the Securities and Exchange Commission on February 21, 2023 carried this statement under the auditor’s name of PricewaterhouseCoopers LLP (PwC): “We have served as the Firm’s auditor since 1965.”
Let that settle in for a few moments as we take a quick tour through the last 10 years of JPMorgan Chase’s history under the same Chairman and CEO, Jamie Dimon, and the same audit firm.
In 2013, after the U.S. Senate’s Permanent Subcommittee on Investigations found that JPMorgan Chase had lied to its regulators while gambling in derivatives in London using depositors’ money from its federally-insured bank and losing $6.2 billion, the bank kept the same audit firm. After the bank admitted to two felony counts in 2014 for money laundering involving the largest Ponzi scheme in U.S. history (Bernie Madoff), it kept the same audit firm. In 2016, after the Hong Kong subsidiary of the bank admitted to bribing Chinese government officials with jobs for their unqualified relatives in exchange for business deals, the bank kept the same audit firm.
In 2021, Shaquala Williams, an attorney and financial crimes compliance professional with more than a decade of experience at multiple global banks, charged in a federal lawsuit that JPMorgan Chase was keeping two sets of books and brazenly flouting the non-prosecution agreement it had signed with the Justice Department in the Chinese bribery case. It was revealed during her deposition testimony, which became part of the court record, that one of the people being paid under her allegation of the bank keeping two sets of books was Tony Blair, the former Prime Minister of the U.K. (See our report: JPMorgan Whistleblower Names Former U.K. Prime Minister Tony Blair in Court Documents as Receiving “Emergency” Payments from Bank.) The case was quietly settled for an undisclosed sum and the Board of Directors of JPMorgan Chase kept Dimon at the helm along with the same audit firm.
Just last year, the Attorney General of the U.S. Virgin Islands charged in a federal lawsuit that JPMorgan Chase had not only facilitated the sex trafficking of underage girls by Jeffrey Epstein but that the bank “actively participated in Epstein’s sex-trafficking venture from 2006 until 2019.” A Memorandum of Law arguing for partial summary judgment in the case, made the following points:
“Even if participation requires active engagement…there is no genuine dispute that JPMorgan actively participated in Epstein’s sex-trafficking venture from 2006 until 2019. The Court found allegations that the Bank allowed Epstein to use its accounts to send dozens of payments to then-known co-conspirators [redacted] provided excessive and unusual amounts of cash to Epstein; and structured cash withdrawals so that those withdrawals would not appear suspicious ‘went well beyond merely providing their usual [banking] services to Jeffrey Epstein and his affiliated entities’ and were sufficient to allege active engagement.”
According to the U.S. Virgin Islands, the amount of hard cash that the bank funneled to Epstein tallied up to more than $5 million, without the bank filing the legally-mandated Suspicious Activity Reports – the same reports it was legally-mandated to file in the Madoff matter but didn’t.
JPMorgan Chase settled the U.S. Virgin Islands’ case against it for $75 million, while settling a related federal lawsuit brought by victims of Epstein’s sex trafficking and sexual assaults for $290 million; $365 million is a lot of money to pay if you’re innocent of the charges.
Even after JPMorgan Chase’s ties to Epstein’s sex-trafficking made scandalous headlines around the world, the Board of Directors kept the same audit firm and the same Chairman and CEO, Jamie Dimon. In fact, the Board bumped up Dimon’s pay for last year to $36 million from $34.5 million in 2022.
Another potential problem at JPMorgan Chase is that its Board of Directors, who would certainly seem to have had more than adequate reasons to sack both Dimon and its auditing firm, have numerous financial relationships with the bank. (See JPMorgan Chase Failed to Disclose Its Role in Financing a $1.8 Billion Loan to a Ski Resort Deal Tied to an “Independent” Board Member; and If You’re Baffled as to Why JPMorgan Chase’s Board Hasn’t Sacked Jamie Dimon as the Bank Racked Up 5 Felony Counts – Here’s Your Answer.)
If this is not the brand of capitalism you want to leave to your children and grandchildren, pick up your phone today and call your U.S. Senators and demand a truly independent investigation of what is going on at what even its regulators say is the riskiest bank in the United States.
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