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Don't Mention Madoff: JP Morgan Whistleblower Not Fired For Whistleblowing (Allegedly) In Third Trial

Here we go again, the third trial, following two appeals, in which former JP Morgan Wealth Manager, Jessica Sharkey, claims she was unfairly dismissed after whistleblowing on one of the bank’s clients shortly after the Bernie Madoff scandal came to light.

The client in question, an Israeli with involvement in the diamond cutting and pre-paid calling card businesses, was a “big fish”, was generating about $600,000 of revenue annually for the bank.

Sharkey had alleged that the client’s multiple bank accounts and failure to provide sufficient information to satisfy “Know Your Customer” requirements led her to conclude that the bank’s relationship with the client should be terminated.

It was clear from recent filings that Sharkey wanted to highlight the contemporaneous nature of her dismissal and Madoff’s arrest. However, Judge Cote said "There will be no discussion of Bernie Madoff at this trial," in a pretrial hearing. Cote argued it could unfairly prejudice jurors against the bank. JPMorgan Chase paid over $2.5 billion to settle claims for failing to adequately oversee accounts used by Madoff in his Ponzi scheme. Madoff is currently serving a 150-year sentence.

Sharkey testified (again) earlier in the week that she was fired in 2009 for whistleblowing on a bank client (“Client A”), who she suspected of fraud and money laundering. According to Bloomberg, JP Morgan and its defendants claimed in court that the Client A issue was irrelevant and Sharkey was primarily fired for lying about another client (“Client H”).

…her former boss testified.

 

"In the end, it was the fact she lied to me," Leslie Lassiter told jurors in Manhattan federal court Wednesday. "It’s hard to have somebody working for you who you can’t trust. That’s pretty fundamental in a bank."

 

Lassiter, a key witness for JPMorgan Chase in its defense of Sharkey’s whistle-blower suit, said she was fired for lying when questioned about contacts with the representative of a different wealthy customer. The client’s office manager called to complain that Sharkey hadn’t returned her calls and to ask if the wealth manager was just "a phantom," according to Lassiter, who is one of three JPMorgan employees named as defendants in Sharkey’s suit, alongside the bank. Lassiter said she assigned the client, referred to in the trial only as "Client H," to Sharkey, who’d been promoted from private banker to private wealth manager in 2008. Client H had about $25 million managed by the bank, she said.

Lassiter claims that Sharkey lied numerous times and performed some parts of her job poorly, in spite of adding 50 new clients and more than $100 million of assets to JP Morgan’s Wealth Management business. From Bloomberg..

Lassiter told jurors she asked Sharkey at least a half dozen times whether she’d been in contact with Client H or his office, and that Sharkey gave her reassurances.

 

"‘Don’t worry, I’m on it. Taken care of,’" Sharkey said, according to Lassiter. Lassiter said she then got a call from Client H’s office manager, known in the trial as "Manager T," who said she couldn’t get her calls returned by Sharkey. Manager T questioned whether Sharkey was a phantom and asked if she needed to pull her boss’s money out of JPMorgan Chase to get her attention, Lassiter testified.

 

Lassiter then discussed Manager T’s call with Sharkey, in a meeting on July 21, 2009. Sharkey admitted she’d never contacted Manager T, according to Lassiter. Lassiter also faulted Sharkey for a "casual attitude" toward her work and her inability to wrap up required "Know Your Customer" processes on client accounts. Sharkey was fired Aug. 5. Under questioning by Sharkey’s lawyer, Lassiter testified that Sharkey had been promoted to private wealth manager about a year before she was fired. Sharkey was responsible for bringing more than 50 new client relationships totalling more than $100 million in assets.

On Tuesday, Bloomberg provided more details on Sharkey’s testimony...

Sharkey claims JPMorgan Chase violated whistle-blower protections in the 2002 Sarbanes-Oxley Act and is seeking back pay, compensation for her emotional distress and reinstatement to her job.

 

Sharkey told the jury of five women and three men on Tuesday that she was let go after telling superiors she planned to send out letters terminating the bank’s relationship with Client A, who had about $14 million under management.

 

"I was fired the next day," Sharkey said. Michael Schissel, a lawyer for the bank, sought to undercut Sharkey’s testimony that she suspected Client A of breaking the law. "You never put in writing that you believed Client A was engaged in illegal activities, true?" Schissel asked. "True," Sharkey said.

The report noted that there was another, albeit unrelated, lawsuit in March this year by whistleblower fired by JP Morgan...

In an unrelated case, a former JPMorgan private client adviser claimed in a March lawsuit that he was fired for blowing the whistle on potential Dodd-Frank Act violations to upper management.

 

Bradley Sayre said he was told to toss out notes in his files and destroy fraudulent sales materials while the bank was negotiating a settlement with the Justice Department over fraudulent sales of collateral backed securities. The bank has sought a dismissal of the case, saying Sayre is pursuing the same claims in arbitration.

While this murky case continues, we can’t say that we are confident that Jennifer Sharkey will prevail. However, at least she hasn’t fallen from any tall buildings.