Oh what a tangled web we weave when first we practice to deceive.

All too often we have heard senior level individuals from an array of financial institutions and regulatory agencies say that they too were deceived by the master swindler Bernie Madoff.

That sort of lame excuse might work for a naive young teenager duped by an online scam artist trying to make a quick buck. It certainly does not and should not hold any water for senior level bankers running an institution like JP Morgan. Why is that?

One of the first and most prominent rules on Wall Street is known as ‘KYC,’ that is, ‘Know Your Customer.’  Bernie Madoff maintained his primary banking account at the venerable JP Morgan for two decades or thereabouts. A review of the Madoff trustee’s report of the transactions and engagement between the scam artist and JP Morgan reads like a “how to” manual for the operation of a laundromat. Time after time after time, JPM conveniently looked the other way while Madoff entered into the wash, rinse, and repeat cycle that facilitated the ongoing operation of his scam.

Rather than embracing its obligation to fully ‘KYC’, those in charge of the banking division housing Madoff’s account effectively aided and abetted the ongoing scandalous operation. Even when the temperatures started rising around Madoff’s scam, JP Morgan whiffed in upholding its responsibilities but rather looked to ‘CYA’ its own exposures while leaving Madoff’s investors out to dry. For those interested in gathering a more detailed look inside JPM, I recommend you read the Bloomberg commentary, JP Morgan Pays for Shorting Madoff Without Telling Anyone.

While JP Morgan pays a few billion dollars and agrees to a deferred prosecution agreement for its massive failings in this situation, I think most people continue to have the following  questions:

1. Why is it that we have never fully learned about the relationships between Madoff and those running the SEC and FINRA (NASD)?

2. Why is that nobody at JP Morgan — including chairman and CEO Jamie Dimon himself — is held to account for the bank’s failures to perform and protect Madoff investors specifically in this situation? If Bob Diamond could be shown the door by British regulators for a lack of proper oversight in that bank’s dealings in the Libor scandal, how can nobody at JP Morgan suffer the same consequences in this fraud?

The lack of meaningful answers to both these questions will not be forthcoming and that only serves the continued erosion of trust and confidence in the system.

Navigate accordingly.