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