JPMorgan’s $290M for Epstein victims sends a signal to the industry

Federal court judge approves substantial payout and says the industry must take responsibility.

A $290 million settlement between JPMorgan Chase & Co. and victims of Jeffrey Epstein was approved by a federal judge, who rejected a last-minute challenge from a group of state attorneys general that could have delayed the payout to almost 200 victims.

US District Judge Jed Rakoff said the pact, which resolved claims that the bank ignored red flags to keep Epstein as a client, would send a signal to the financial industry and beyond.

“It should not be lost that this case sent a message, through this very substantial settlement, that banking institutions and others as such have a responsibility that perhaps was not fully recognized in the past,” Rakoff said at a hearing Thursday afternoon in Manhattan on the fairness of the accord.

His approval marks the end of a long court battle over JPMorgan’s treatment of Epstein when he was a prized client between 1998 and 2013. A Jane Doe victim sued the bank late last year, claiming it knowingly benefited from Epstein’s sex trafficking. The litigation unearthed details of Epstein’s associations with senior bankers, including Jes Staley, who stepped down as Barclays Plc chief executive officer over his ties to the late sex offender.

PHRASE IN CONTENTION

The preliminary settlement, in which JPMorgan didn’t admit liability, was reached in June. But top law enforcement officials from 16 states and the District of Columbia last month objected to some of its terms.

In particular, the attorneys general pointed to a clause that released JPMorgan from future claims by any “sovereign or government” on behalf of victims already in line for damages as part of the class action.

“Allowing such a broad release of claims may have serious implications for future cases brought by state law enforcement against perpetrators of sex trafficking,” New Mexico Attorney General Raul Torrez wrote in a letter to the court.

The judge said the pact was clear.

James Grayson, a lawyer for the attorney general, said the state had “an ongoing investigation” related to Epstein.

HOLDING BANKS ‘ACCOUNTABLE’

Outside court on Thursday, victims’ lawyer David Boies said the approval was a significant step for the survivors.

“As the court said, it also sends a message to banks and other institutions that they will be held accountable,” he said.

Boies and other attorneys also represented victims in a lawsuit against Deutsche Bank AG. The German lender, which became Epstein’s main financial institution after JPMorgan cut ties with him in 2013, agreed to settle that suit in May for $75 million, without admitting to wrongdoing.

JPMorgan called Thursday’s outcome “fair.”

“This was a fair and just resolution for the nearly 200 survivors who bravely came forward,” a spokeswoman for the bank said in a statement. “We’re pleased the judge set aside the AGs’ meritless objections, allowing the survivors to be compensated.”

DOUBLE DIPPING

The clause in question still gave states the scope to pursue claims on behalf of residents or file civil enforcement actions, a lawyer for JPMorgan wrote in a Nov. 6 letter to the court.

But the bank pointed to legal precedent that prevented double dipping, arguing states can’t sue it for harm to Epstein’s victims if it has already paid damages to compensate them for that harm.

Boies told the court in a separate letter it wouldn’t serve the interests of Epstein’s survivors to “delay and renegotiate a huge recovery” to reaffirm attorney general rights they hadn’t already exercised.

In siding with JPMorgan and Boies, Rakoff found that the language in the settlement was straightforward and justified. The judge also signed off on the lawyers’ taking 30% of the settlement amount in fees. An Epstein victim had objected to the size of their cut. Rakoff said it reflected the “very good result” for the plaintiffs.

‘TREMENDOUS’ HARM

Simone Lelchuk, the claims administrator for the settlement, agreed to provide the judge with updates every three months on decisions she makes about victim claims.

“There are a tremendous amount of people who have been harmed here,” she said in court.

Separately, JPMorgan reached a $75 million settlement over Epstein with the US Virgin Islands in September. He had a private retreat in the USVI and took some of his victims there. JPMorgan hasn’t admitted liability in that case either.

The cases are Jane Doe 1 v. JPMorgan Chase Bank, 22-cv-10019, and USVI v. JPMorgan Chase Bank, 22-cv-10904, US District Court, Southern District of New York (Manhattan).