In a significant legal development, U.S. District Judge Jed Rakoff approved on Thursday to JPMorgan Chase’s $290 million settlement with women who alleged sexual abuse by the late financier Jeffrey Epstein. The judge praised the agreement as a “really excellent settlement” and emphasized its potential to deter future sex trafficking by making banks more vigilant about transactions associated with such activities.
Acknowledgment of Responsibilities
Judge Rakoff underscored that the case conveyed a crucial message to banking institutions about their responsibilities, which may not have been fully recognized in the past. The approval of the settlement signals a paradigm shift in holding financial entities accountable for their roles in facilitating transactions linked to sex trafficking.
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JPMorgan’s Oversight Failure
The settlement comes after revelations that JPMorgan neglected internal warnings and overlooked red flags concerning Epstein due to his status as a valuable client. Epstein had been a client of JPMorgan from 1998 to 2013, maintaining the banking relationship even after his arrest in 2006 on prostitution charges.
No Admission of Wrongdoing
Notably, JPMorgan did not admit any wrongdoing as part of the settlement. A spokesperson for the bank stated, “This was a fair and just outcome for the nearly 200 survivors who bravely came forward,” following the judge’s approval.
States’ Attempt to Amend Agreement
Earlier the same day, Judge Rakoff rejected a request from 16 U.S. states and Washington D.C. to modify certain wording in the settlement agreement. The states were concerned that the language could limit their ability to pursue damages related to sex trafficking by Epstein and his associates.
Ongoing State Investigations
James Grayson, a lawyer representing New Mexico, revealed that the state is conducting an ongoing investigation into the matter. The concern was that JPMorgan might attempt to block future claims by states. However, no further details about New Mexico’s probe were provided.
Judge Rakoff’s Response
Judge Rakoff countered the states’ objections, noting that they had not yet filed any claims. He pointed out that the U.S. Virgin Islands had previously sued JPMorgan, reaching a $75 million settlement in September 2022. The judge emphasized that objecting to the settlement now, after not taking prior action, was inconsistent.
Settlement Details and Concerns
The approved settlement covered more than 100 women, with 191 individuals applying to the fund overseen by lawyer Simone Lelchuk. The judge expressed some reservations about the lack of detailed guidance on distributing funds and requested periodic summaries of Lelchuk’s decisions every three months.
Legal Fees and Approval
Judge Rakoff approved legal fees amounting to 30% of the settlement value for the lawyers representing the class of women. Attorney David Boies, one of the legal representatives, expressed that the approval marked “a great step forward for survivors.”
Similar Settlement with Deutsche Bank
It is worth noting that Judge Rakoff had previously given final approval to a $75 million settlement between Epstein’s accusers and Deutsche Bank on October 20. This settlement pertained to Epstein’s banking relationship with Deutsche Bank after JPMorgan terminated its association with him.
Conclusion: Continuing Legal Fallout
The settlement and Judge Rakoff’s approvals come in the aftermath of Jeffrey Epstein’s death in a Manhattan jail cell in 2019 and the conviction of Ghislaine Maxwell in December 2021. Maxwell, Epstein’s former girlfriend and associate, is currently serving a 20-year prison sentence and is appealing her conviction. The legal fallout from Epstein’s actions continues to unfold, impacting major financial institutions and prompting a reexamination of their responsibilities.
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