JPMorgan Chase will pay about $2 million .....really??? Such a DEAL!

Chase's new tab: $2 million
National Century case settlement its 2nd
Saturday, March 29, 2008 3:14 AM


FROM STAFF REPORTS
JPMorgan Chase will pay about $2 million to settle a case involving its relationship with National Century Financial Enterprises, the Securities and Exchange Commission announced this week.

The SEC accused Bank One and JPMorgan Chase, which now owns Bank One, of "negligent conduct" involving improper transfers among the accounts of National Century subsidiaries for which they served as trustees.

National Century and those subsidiaries collapsed, causing investor losses that the SEC pegged in its statement at $3.6 billion.

The SEC said the banks, at the instruction of National Century, moved money around, making it appear on days when balances were reported that there was enough money in accounts to meet requirements.

The SEC said the transfers were "large, recurring and contrary to the requirements. … Bank One and JPMorgan Chase were negligent and should have known" that National Century was trying to hide shortfalls.

A JPMorgan Chase spokeswoman confirmed the settlement but declined to comment.

This is not the first time JPMorgan Chase has agreed to a multimillion-dollar settlement involving its work with National Century.

Two years ago, it reached a $425 million settlement with National Century creditors, Bloomberg News reported at the time.

National Century was a Dublin-based company that served as a financier for health-care providers. National Century agreed to buy the providers' uncollected debts owed by patients, or accounts receivable, and give the providers money to cover expenses.

To raise that money, National Century set up subsidiaries, or "programs" as the SEC called them in this week's settlement, and sold bonds to investors.

National Century went bankrupt in 2002.

Five former National Century executives were convicted this month of fraud and other charges related to their business dealings that led to the company's collapse. The five are expected to be sentenced this summer.

Four other executives have pleaded guilty.

The company's leader and co-founder, Lance K. Poulsen, and his friend Karl A. Demmler were found guilty this week in a witness-tampering case related to the National Century case.

The two were convicted of trying to sway the testimony of a former company executive who is expected to testify against Poulsen in his upcoming trial. He faces a variety of charges related to National Century's collapse in 2002.