Speaker 1: This is Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 2: This is Bloomberg Law. I'm Madison Mills in for June
Speaker 2: Grasso this week. Well, JP Morgan has agreed to pay
Speaker 2: two hundred and ninety million dollars to settle a lawsuit
Speaker 2: alleging it knowingly benefited from former client Jeffrey Epstein's sex trafficking.
Speaker 2: That's according to a person familiar with the matter in
Speaker 2: Bloomberg News reporting. So joining us now to discuss this
Speaker 2: is Hannah love It, Bloomberg News finance reporter. Hannah, thank
Speaker 2: you so much for being with us on the line.
Speaker 2: Just give me the context here for anyone who hasn't
Speaker 2: been following. What are the charges here and what are
Speaker 2: the details of the lawsuit?
Speaker 3: Hey, thank you so much for having me so an
Speaker 3: unnamed victim of Jeffrey Epstein's food JP Morgan the biggest
Speaker 3: us thank late last year alleging, as you said, that
Speaker 3: it knowingly benefited from Epstein's sex trafficking. So Epstein was
Speaker 3: a client of JP Morgan from the late nineties until
Speaker 3: twenty thirteen. Now, remember Jeffrey Epstein was you know, indicted
Speaker 3: in Florida in two thousand and six, and you know,
Speaker 3: then again arrested in twenty nineteen and went to jail
Speaker 3: and that's where he died. So this was coming up,
Speaker 3: you know, really a couple of years after that, it
Speaker 3: kind of reignited this really the storm across Wall Street
Speaker 3: as far as like ties to Epstein And can you help.
Speaker 2: Me contextualize the number here? Two hundred and ninety million.
Speaker 2: Is that a drop in the bucket for JP Morgan?
Speaker 2: How does that square for them?
Speaker 1: Yeah?
Speaker 3: I mean they've they've been fined, you know, I think
Speaker 3: they paid something like nine hundred million to settle hooping
Speaker 3: charges a couple of years ago and some more in that.
Speaker 3: But yet they paid two hundred and fifty million a
Speaker 3: little more than a year ago to settle what's that
Speaker 3: probe about, you know, communicating with clients on on unauthorized channels.
Speaker 3: So that would be the one the closest kind of
Speaker 3: comparison in recent memory as far as what it means
Speaker 3: to the JP Morgan.
Speaker 2: And so what does the the payout tell us in
Speaker 2: terms of JP Morgan's accountability here? And what are what's
Speaker 2: the bank saying about that accountability?
Speaker 3: Yeah, so what we reported citing sources is that the
Speaker 3: bank is not making admissions of liability as part of
Speaker 3: the settlement. So that's, you know, what we're expecting to
Speaker 3: be the line from from them. And they've been fighting
Speaker 3: this lawsuit in another lawsuit from the US Virgin Islands
Speaker 3: over their types to Epstein, you know, pretty vigorously. So yeah,
Speaker 3: I would say that's you know, Jamie Diamond himself, the
Speaker 3: CEO of JP Morgan. You know, he's been deposed as
Speaker 3: part of this. He's said repeatedly that he never met
Speaker 3: Jeffrey Epstein or knew who he was, things like that.
Speaker 3: But he's said that, you know, their hard squat victims
Speaker 3: and things like that. So this kind of I mean,
Speaker 3: the fact that they settled with the victims is not
Speaker 3: a huge surprise in that sense.
Speaker 2: And you mentioned some other lawsuits, including the one by
Speaker 2: the US Virgin Islands where he had a private retreat
Speaker 2: Epstein and brought several of his victims previously. Can you
Speaker 2: tell me anything that we might know about that lawsuit
Speaker 2: and whether or not, you know, the outcome of today
Speaker 2: has any sort of impact on that lawsuit or what
Speaker 2: bank executives are thinking about that one as well.
Speaker 3: Yeah, So that one's ongoing. It was filed around the
Speaker 3: same time as the victim one was filed, and you know,
Speaker 3: as of today, as of right now, that one is
Speaker 3: still going on. And then Jason Morgan also turned around
Speaker 3: in March and to one of their former executives, Jeff Bailey,
Speaker 3: you know, seeking to blame him for their ties, for
Speaker 3: the firm's ties to Epstein, saying he misled them and
Speaker 3: things like that. So that both of those are so ongoing.
Speaker 2: Yeah, I wanted to ask you about that suit against
Speaker 2: Jess Staley as well. Have you learned anything else from
Speaker 2: your sources about what that might look like for the
Speaker 2: bank and from Staley's perspective as well.
Speaker 3: Yeah, I mean, there's nothing new about that today. There
Speaker 3: that was you know, not part of the Japon Morgan's
Speaker 3: settlement with the victims other than that, what you know,
Speaker 3: part of what Jake and Morgan is speaking in their
Speaker 3: suit against Staley is for him to be liable for
Speaker 3: you know, an any damages or anything like that that
Speaker 3: they pay out to these plaintiffs. So that will be
Speaker 3: something to watch, but there were no updates today. However,
Speaker 3: Staley was deposed over the weekend, and so we've written
Speaker 3: a bit about that that it happened basically.
Speaker 2: And that's kind of unprecedented, right, that's a pretty big
Speaker 2: deal to kind of sue Staley through a third party complaint.
Speaker 1: Yeah.
Speaker 3: I would describe it as it was a ramatic term
Speaker 3: in this saga when it happened.
Speaker 2: Yeah, And this is kind of a question across Wall
Speaker 2: Street because there are so many associations with Epstein from
Speaker 2: other institutions as well. Do you anticipate any other banks
Speaker 2: getting swept up in this beyond JP Morgan?
Speaker 3: Yeah, So Deutsche Bank actually settled with so when Epstein
Speaker 3: left JP Morgan, he went to Deutsche Bank, that's what
Speaker 3: he was a client, and they settled with victims for
Speaker 3: seventy five million. I believe something in that ballpark fairly recently.
Speaker 2: So beyond Deutsche Bank, though, we think that is that
Speaker 2: the kind of final for now, the final shoot a
Speaker 2: drop when it comes to the names.
Speaker 3: Oh yeah, So the two banks that have really been
Speaker 3: in the spotlight over this are JAKEI Morgan and deutsch Bank.
Speaker 1: Yeah.
Speaker 2: Yeah, And I just continue to think about the bank
Speaker 2: kind of making no admission of liability in connection with
Speaker 2: the settlement, which we learned from your reporting. You know,
Speaker 2: do we anticipate any pushback from that lack of admission
Speaker 2: of liability from clients, investors in the bank, or is
Speaker 2: this just kind of, you know, a payout that is
Speaker 2: going to silence the conversation and distance JP Morgan from
Speaker 2: the the Epstein ongoing saga as a whole.
Speaker 3: Yeah, I mean that's a great question. I've been like
Speaker 3: even the you know, David Boyce is one of the
Speaker 3: attorneys for Jane Doe said today in his statement that
Speaker 3: you know, it's a great day for Jeffrey Epstein's survivors,
Speaker 3: a great day for justice. So that was the reaction
Speaker 3: we saw from him. And then yeah, I haven't heard
Speaker 3: anything to the country as far as like, you know,
Speaker 3: from the clients or things like that, or any skill over.
Speaker 3: I think as far as you know, the wider JP
Speaker 3: Morgan apparatus was concerned, it was a bit. I mean,
Speaker 3: it's been six months of just you know, the drip
Speaker 3: drip of more emails released and things like that, so
Speaker 3: I think it was and these things are all, you know,
Speaker 3: a decade old at this point, so it was probably
Speaker 3: you know, people are looking forward to putting this behind them.
Speaker 3: Inside Jacob Morgan.
Speaker 2: Well, and speaking of kind of your other reporting when
Speaker 2: it comes to JP Morgan dealing with this, help our
Speaker 2: audience remind our audience about the executive within JP Morgan
Speaker 2: who has had some emails with Jeffrey Epstein unveiled in
Speaker 2: recent weeks.
Speaker 3: Yeah, so I had a story out today about Mary Erdos,
Speaker 3: who is the longtime chief of the Asset and wealth
Speaker 3: management unit at Jacob Morgan. She actually succeeded Jeff Bailey
Speaker 3: a top of the private bank when he got promoted
Speaker 3: to the head of that unit in two thousand and five,
Speaker 3: and then when he got moved over to the investment
Speaker 3: in two thousand and nine, she succeed him a top
Speaker 3: asset and wealth management where she still is today. And
Speaker 3: so she's the one, you know, as far as still
Speaker 3: still remaining JP Morgan executives, you know, people who haven't
Speaker 3: left the firm and things like that, who has you know,
Speaker 3: she's had emails coming out of this thing this whole time.
Speaker 3: You know she was she ran the private bank and
Speaker 3: then all of f and wealth management. So that's you know,
Speaker 3: she she has been contending with that.
Speaker 2: And in our final couple of minutes together, can you
Speaker 2: walk me through a little bit more of what was
Speaker 2: in those emails and what it tells us about not
Speaker 2: just Mary's connection with Ebstein, but the bank's broader connection
Speaker 2: with him.
Speaker 3: Yeah, I mean there are a ton I think the
Speaker 3: number for the emails exchanged between Staley and Epstein during
Speaker 3: Staley's time at JP Morgan itself was more than a thousand.
Speaker 3: So we're looking at, you know, a lot of a
Speaker 3: lot of emails and a lot of discovery materials that
Speaker 3: were then you know, fifted through and put into these
Speaker 3: lawsuits and things like that. I mean, it's everything from
Speaker 3: you know, scheduling to trying to at one point, you know,
Speaker 3: was portraying himself as a close advisor to Bill Gates
Speaker 3: and trying to set up a meeting with people at
Speaker 3: JP Morgan for a fund, his idea for a fund,
Speaker 3: and things like that. So it's really kind of all
Speaker 3: over the board about over things like that.
Speaker 2: Yeah, I'm just reading your story. One of the quotes
Speaker 2: from Epstein that he wrote to Mary Rosa and her predecessor,
Speaker 2: former mentor Just Daly, in an email saying, I'm well
Speaker 2: aware of my current unfortunate rainbow. I am also aware
Speaker 2: that JPM has a color, colorful array of clients, So
Speaker 2: that kind of says it all. Hannah Lovitt, thank you
Speaker 2: so much for joining us. Hannah love It is a
Speaker 2: Bloomberg News finance reporter. You are listening to Bloomberg Lostick
Speaker 2: with us here. We've got more coming up right now.
Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
Speaker 2: This is Bloomberg Law. I'm Madison Mills in for June Grasso.
Speaker 2: This week big acquisition news today, Nasdaq has agreed to
Speaker 2: buy financial software maker Adenza from its private equity owner
Speaker 2: and the US exchange operator's biggest ever deal. We're talking
Speaker 2: ten and a half billion dollars. So Kat Doherty is
Speaker 2: here with me to discuss. She's a Bloomberg News finance reporter. Kat,
Speaker 2: great to speak with you. Talk to me about what
Speaker 2: we need to know about this deal. What are your
Speaker 2: sources saying today.
Speaker 4: Well, everyone is talking about the size. Yes, it is
Speaker 4: Nasdaq's would be biggest deal should it pass regulatory approval,
Speaker 4: which they are expecting will come within six to nine months.
Speaker 4: But the cost of this is not nothing. They're paying
Speaker 4: for it with a combination of cash inequity. Toma Bravo,
Speaker 4: the owner of Adenza, is going to be taking a
Speaker 4: nearly fifteen percent steak in Nasdaq. That's going to be
Speaker 4: among one of the biggest steaks of any Nasdaq investor group.
Speaker 4: So that's something to look out for and I think
Speaker 4: something I heard a lot of people ask about today.
Speaker 4: And also they get a board seat. So there's a
Speaker 4: lot of collaboration cross collaboration between Toma, Bravo and Nasdaq,
Speaker 4: which is not unusual to see some pretty big players
Speaker 4: in the finance markets come forward and collaborate in this way,
Speaker 4: but we haven't seen anything that kind of matches it
Speaker 4: to this scale. But the valuation is something that Nasdak's
Speaker 4: going to have to think about in terms of the
Speaker 4: debt that they're going to have to take on. They're
Speaker 4: issuing some debt to pay for this acquisition. That's going
Speaker 4: to increase their leverage. Now, they've taken on debt and
Speaker 4: increase leverage before in previous acquisitions, and they've proven that
Speaker 4: they can take down that leverage over time and through
Speaker 4: cost synergies and using cash that they generate from these
Speaker 4: deals to pay down debt. But that's still a question.
Speaker 4: It's not necessarily a guarantee. So those are some of
Speaker 4: the things that people are thinking about with this deal.
Speaker 2: And is the market sense of this deal that it's
Speaker 2: a little overpriced. Is that why we're seeing a dip
Speaker 2: in the Nasdaq stock today?
Speaker 4: Well, it is more, I believe than what Toma Bravo
Speaker 4: paid for. There were two companies that they bought. They
Speaker 4: were very well known, the first Calypso Technology, the second
Speaker 4: Axiom sl They combined those two to create Adenza recently.
Speaker 4: Uh and I believe that the cost that NASDAC is
Speaker 4: paying for it is more. That being said, the rationale
Speaker 4: that NASDAK has has given investors as to the price
Speaker 4: is that they say, this is a going to be
Speaker 4: a huge cash generator for them. They don't see a
Speaker 4: problem with taking on the new debt and giving this
Speaker 4: equity stake, but it is something that they're going to
Speaker 4: have to manage and they're going to have to monitor
Speaker 4: the potentially higher expenses when you take on a new
Speaker 4: company like this, and it's just going to be another
Speaker 4: it's going to be another really pain point for them
Speaker 4: that they're going to have to get through so that
Speaker 4: on the other side they can show investors, hey, here's
Speaker 4: something that they're saying. There is a boon for our business.
Speaker 4: They think of it as a great deal. It's just
Speaker 4: whether or not investors view it in the same way.
Speaker 2: Well, and they're saying that it's potentially a tailwind for
Speaker 2: them because of banking pressures.
Speaker 4: So it was interesting today on call with investors. There
Speaker 4: was a question that was asked, I wish I had
Speaker 4: thought of this question, which was a lot of Denza's
Speaker 4: clients are banks and brokers, and the banking sector has
Speaker 4: been under a lot of pressure recently. So they were
Speaker 4: asking Nasdaq, is that an issue for this deal? Is
Speaker 4: it something that complicates the deal in any way, And
Speaker 4: their answer to that was no, In fact, this is
Speaker 4: something that we see as an opportunity. The reason for
Speaker 4: that being Denza's offerings specific deal with regulatory and risk management.
Speaker 4: So if banks are facing further or more regulation and
Speaker 4: risks to their business, they're going to engage and use
Speaker 4: the software potentially in a new or increased way. So
Speaker 4: Nasdaq is saying, great, this is something that we're going
Speaker 4: to actually be able to help clients with rather than
Speaker 4: have it be hurting their business.
Speaker 2: All right, thank you so much for joining us. We
Speaker 2: really appreciate it. This is Bloomberg Law. I'm Madison Mills
Speaker 2: in for June Grasso throughout the week. Come back to
Speaker 2: listen to us and we'll make you smarter on all
Speaker 2: the legal news that you need to know. This is
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