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JPMorgan begins suing customers over ‘infinite money glitch’

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The Chase bank logo above ATMs, taken in Manhattan.

Michael Kappeler | Picture Alliance | Getty Images

JPMorgan Chase has begun suing customers who allegedly stole thousands of dollars from ATMs by taking advantage of a technical glitch that allowed them to withdraw funds before a check bounced.

The bank on Monday filed lawsuits in at least three federal courts, taking aim at some of the people who withdrew the highest amounts in the so-called infinite money glitch that went viral on TikTok and other social media platforms in late August.

A Houston case involves a man who owes JPMorgan $290,939.47 after an unidentified accomplice deposited a counterfeit $335,000 check at an ATM, according to the bank.

“On August 29, 2024, a masked man deposited a check in Defendant’s Chase bank account in the amount of $335,000,” the bank said in the Texas filing. “After the check was deposited, Defendant began withdrawing the vast majority of the ill-gotten funds.”

JPMorgan, the biggest U.S. bank by assets, is investigating thousands of possible cases related to the “infinite money glitch,” though it hasn’t disclosed the scope of associated losses. Despite the waning use of paper checks as digital forms of payment gain popularity, they’re still a major avenue for fraud, resulting in $26.6 billion in losses globally last year, according to Nasdaq’s Global Financial Crime Report.

The infinite money glitch episode highlights the risk that social media can amplify vulnerabilities discovered at a financial institution. Videos began circulating in late August showing people celebrating the withdrawal of wads of cash from Chase ATMs shortly after bad checks were deposited.

Normally, banks only make available a fraction of the value of a check until it clears, which takes several days. JPMorgan says it closed the loophole a few days after it was discovered.

Miami and California

The other lawsuits filed Monday are in courts including Miami and the Central District of California, and involve cases where JPMorgan says customers owe the bank sums ranging from about $80,000 to $141,000.

Most cases being examined by the bank are for far smaller amounts, according to people with knowledge of the situation who declined to be identified speaking about the internal investigation.

In each case, JPMorgan says its security team reached out to the alleged fraudster, but it hasn’t been repaid for the phony checks, in violation of the deposit agreement that customers sign when creating an account with the bank.

JPMorgan is seeking the return of the stolen funds with interest and overdraft fees, as well as lawyers’ fees and, in some cases, punitive damages, according to the complaints.

Criminal cases?

The lawsuits are likely to be just the start of a wave of litigation meant to force customers to repay their debts and signal broadly that the bank won’t tolerate fraud, according to the people familiar. JPMorgan prioritized cases with large dollar amounts and indications of possible ties to organized crime, they said.

The civil cases are separate from potential criminal investigations; JPMorgan says it has also referred cases to law enforcement officials across the country.

“Fraud is a crime that impacts everyone and undermines trust in the banking system,” JPMorgan spokesman Drew Pusateri said in a statement to CNBC. “We’re pursuing these cases and actively cooperating with law enforcement to make sure if someone is committing fraud against Chase and its customers, they’re held accountable.”

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State Street worries about crypto rally

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GLD's competition: more than bitcoin?

The bitcoin rally is generating a false sense of security among investors, according to the strategist behind the so-called granddaddy of gold exchange-traded funds.

State Street Global Advisors’ George Milling-Stanley warns cryptocurrency plays don’t offer the stability of gold.

“Bitcoin, pure and simple, it’s a return play, and I think that people have been jumping onto the return plays,” the firm’s chief gold strategist said on CNBC’s “ETF Edge” this week.

Milling-Stanley’s comments came as his firm’s SPDR Gold Shares ETF (GLD) celebrated its 20-year anniversary this week. It is the world’s largest physically backed gold ETF, and it’s up more than 30% in 2024.

“Gold was $450 an ounce [20 years ago],” said Milling-Stanley. “It’s now five times what that price was then. If you look at a five-times price, then gold should be somewhere over $100,000 in twenty years’ time.”

Gold just had its best weekly performance since March 2023. Gold futures settled at $2,712.20 on Friday, the highest settle since Nov. 5. Gold prices are now just 3% below the record high hit on Oct. 30.

Bitcoin, which has surged since the Nov. 5 election, is having a banner year, too. It hit an all-time high on Friday.

Milling-Stanley thinks investors who treasure gold’s safety qualities should reconsider piling into bitcoin. He suggests the crypto world is trying to manipulate them.

“This is why they [bitcoin promoters] called it mining. There’s no mining involved. This is a computer operation, pure and simple,” he said. “But they called it mining because they wanted to seem like gold — maybe take some of the aura away from the gold.”

Yet, he acknowledges it is unclear how high the yellow metal can actually go.

“I have no idea what’s going to happen over the next 20 years except it’s going to be a fun ride,” Milling-Stanley said. “I think that gold is going to do well.”

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What ETFs are the best for those in or near retirement?

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Americans are retiring at a record-setting pace amid the aging of the baby boomer generation, and exchange-traded funds (ETFs) have become a popular way for retirees to invest in ways that align with their risk tolerance and diversification needs.

A recent report by the Alliance for Lifetime Income found that about 4.1 million Americans are projected to turn 65 on an annual basis from 2024 through 2025. That has pushed the number of Americans turning 65 each day from roughly 10,000 in the past decade to more than 11,200 this year.

ETFs can offer investors access to a variety of investment themes of interest to retirees, from equity ETFs optimized for dividend yields to bond ETFs yielding interest on government and corporate debt, as well as those modeled on broader indices like the S&P 500 or that have international exposure. Some can also include built-in hedging strategies to guard against downside risk.

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“Investments are personal, and the ‘best’ ETFs for someone in or near retirement can vary widely, depending on their situation. Those in or near retirement should evaluate their situation in terms of their overall allocation, the time horizon for drawing down or growing their assets, and what level of risk they’re comfortable with,” said Lawrence Sprung, CFP and founder of Mitlin Financial.

Couple celebrates retirement

Retirees can use ETFs to deliver income in retirement by targeting dividend or interest-paying ETFs, or use them to diversify their portfolios. (iStock / iStock)

“Investors that have a higher risk level and longer time horizon will be included to invest in more growth-oriented ETFs. On the other hand, investors who require income today from these assets with a lower risk tolerance will have their portfolios allocated more toward income-oriented investments,” Sprung added. “The ETFs that may be best for one investor may not be the best for another.”

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401k pension stock market

ETFs can be broadly diversified or may be narrowly focused on a certain part of the market. (Angela Weiss / AFP for Getty Images / Getty Images)

Some ETFs offer retirees and future retirees some downside risk protection, said Faron Daugs, the CEO of Harrison Wallace Financial Group.

“Often, these are referred to as buffered ETFs. They are generally tied to a stock market index and have various downside percentage protection in the event of a downturn in the market,” he said. “This type of ETF allows you to participate in potential growth opportunities but offers individuals a little bit of a parachute in the event of a downturn.”

“Another option to consider would be an ETF that invests in dividend-producing stocks. Typically, having a portfolio can generate you a return via a dividend, regardless of the stock performance, can serve as an attractive way to gain some growth potential and offer potential for return in some form – even if the price of the stock declines,” Daugs added.

investment portfolio

ETFs can help investors diversify their portfolios by targeting specific types of assets more efficiently. (iStock / iStock)

ETF: WHAT THEY ARE AND HOW TO MAKE MONEY WITH THEM

If a retiree needs income during their golden years, an ETF that pays dividends or interest can be a wise investment, said Ted Jenkin, co-founder and consultant at oXYGen Financial.

“SPDR Portfolio S&P 500 High Dividend ETF (SPYD), Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and iShares Select Dividend ETF (DVY) are just a few to look at,” he said.

Ticker Security Last Change Change %
SPYD SPDR® PORTFOLIO S&P 500® HIGH DIVIDEND ETF – USD DIS 46.40 +0.53 +1.16%
VIG VANGUARD SPECIALIZED FUNDS DIVIDEND APPRECIATION ETF 201.00 +2.26 +1.14%
DIVY TIDAL ETF TRUST SOUND EQUITY DIV INC ETF 26.88 +0.11 +0.40%

Jared Levy, chief markets strategist at Peak American Financial, said that investors should be “extremely precise the closer they get to retirement” because they typically are shifting from “prioritizing growth to prioritizing protection.” Levy added that it’s “critical to have an all-weather portfolio that is not only balanced for your risk tolerance, but one that doesn’t become correlated if things start to fall apart.” 

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He said that one of his firm’s all-weather portfolios features the Protected S&P 500 ETF (BUFR) along with a mix of corporate and Treasury bond ETFs; bitcoin, gold and precious metal ETFs, a small-cap ETF based on the Russell 2000 and other investment instruments.

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