Ex-JPMorgan banker loses whistleblower case
NEW YORK: A federal judge dismissed a whistleblower lawsuit by a former JPMorgan Chase & Co private banker who said she was fired for questioning the dealings of a lucrative client.
US District Judge Robert Sweet nonetheless offered a broad view of protections offered to whistleblowers under the Sarbanes-Oxley corporate governance law, saying they cover cases involving alleged wrongdoing by a third party, not just by an employer.
The Manhattan judge's ruling could expand the ability of employees to raise raise claims of fraud and other wrongdoing to their employers without fear of retaliation.
Last year's Dodd-Frank financial regulation overhaul also expanded protections and incentives offered to whistleblowers.
In the JPMorgan case, the plaintiff Jennifer Sharkey was a vice president who said her August 2009 firing came after the New York-based bank resisted her call to drop a longtime Israeli client who generated $600,000 of annual business.
Sharkey contended she was punished for her role in an internal probe into the client's alleged involvement in mail fraud, bank fraud and money laundering.
In his ruling, Sweet said the plaintiff failed to properly allege a Sarbanes-Oxley claim because she did not identify the specific illegal conduct forming the basis of her whistleblower complaint.
But he said the statute "should not be read narrowly," given it was designed to promote corporate ethics and protect whistleblowers from retaliation.
Noting the parties' agreement that no decisions on record suggested whether the law covered the reporting of violations by third parties, Sweet said the law had that reach.
"The statute by its terms does not require that the fraudulent conduct or violation of federal securities law be committed by the employer that takes the retaliatory action," the judge wrote.
Citing the statute's language and legislative history, Sweet concluded that Sharkey had "properly pled" tha! t her re porting of her concerns to JPMorgan was protected conduct.
The judge granted Sharkey permission to replead her case, though he dismissed a breach of contract claim.
"She is definitely going to replead, and we are confident the case will eventually go to trial," Douglas Wigdor, a lawyer representing Sharkey, said in an interview. "It is a natural interpretation of Sarbanes-Oxley, and its legislative history, that the law covers whistleblowing concerning third-party activity that has an impact on the employer."
Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan, declined to comment.
Sharkey has said she joined JPMorgan in 2006 and was her department's second-highest producer, managing accounts for more than 75 clients with total assets exceeding $500 million.
The case is Sharkey v. JPMorgan Chase & Co, U.S. District Court, Southern District of New York, No. 10-03824.
US District Judge Robert Sweet nonetheless offered a broad view of protections offered to whistleblowers under the Sarbanes-Oxley corporate governance law, saying they cover cases involving alleged wrongdoing by a third party, not just by an employer.
The Manhattan judge's ruling could expand the ability of employees to raise raise claims of fraud and other wrongdoing to their employers without fear of retaliation.
Last year's Dodd-Frank financial regulation overhaul also expanded protections and incentives offered to whistleblowers.
In the JPMorgan case, the plaintiff Jennifer Sharkey was a vice president who said her August 2009 firing came after the New York-based bank resisted her call to drop a longtime Israeli client who generated $600,000 of annual business.
Sharkey contended she was punished for her role in an internal probe into the client's alleged involvement in mail fraud, bank fraud and money laundering.
In his ruling, Sweet said the plaintiff failed to properly allege a Sarbanes-Oxley claim because she did not identify the specific illegal conduct forming the basis of her whistleblower complaint.
But he said the statute "should not be read narrowly," given it was designed to promote corporate ethics and protect whistleblowers from retaliation.
Noting the parties' agreement that no decisions on record suggested whether the law covered the reporting of violations by third parties, Sweet said the law had that reach.
"The statute by its terms does not require that the fraudulent conduct or violation of federal securities law be committed by the employer that takes the retaliatory action," the judge wrote.
Citing the statute's language and legislative history, Sweet concluded that Sharkey had "properly pled" tha! t her re porting of her concerns to JPMorgan was protected conduct.
The judge granted Sharkey permission to replead her case, though he dismissed a breach of contract claim.
"She is definitely going to replead, and we are confident the case will eventually go to trial," Douglas Wigdor, a lawyer representing Sharkey, said in an interview. "It is a natural interpretation of Sarbanes-Oxley, and its legislative history, that the law covers whistleblowing concerning third-party activity that has an impact on the employer."
Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan, declined to comment.
Sharkey has said she joined JPMorgan in 2006 and was her department's second-highest producer, managing accounts for more than 75 clients with total assets exceeding $500 million.
The case is Sharkey v. JPMorgan Chase & Co, U.S. District Court, Southern District of New York, No. 10-03824.
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