Photographer: Michael Nagle/Bloomberg

JPMorgan Judge Upends $1.1 Million Whistle-Blower Verdict

Updated on
  • Verdict comes after eight years of delays and appeals
  • Judge says jury ‘prejudiced’ against JPM, may order new trial

It took Jennifer Sharkey more than eight years to get a trial over her dismissal from JPMorgan Chase & Co. A Manhattan jury needed only five hours to find the former wealth manager was fired illegally and award her $1.13 million in damages. Then, it took just an hour for a Manhattan judge to upend the verdict and send the whole case back to square one.

A jury of five women and three men found that the bank retaliated by firing Sharkey after she recommended the dumping of a client whom she suspected of fraud and money laundering. The panel rejected the bank’s claim that Sharkey was dismissed because she lied to her boss on multiple occasions. Sharkey was awarded $563,000 in back pay and $563,000 for emotional damage.

That was before lunch on Tuesday. A little more than an hour later, U.S. District Judge Denise Cote said she’ll likely order a new trial if the two sides don’t hammer out a settlement because the verdict is "substantially flawed."

"The award of emotional damages says to me that the jury was prejudiced against the bank," Cote said after JPMorgan Chase asked her to throw out the jury verdict. "That undermines the entire verdict."

Both sides declined to comment after the hearing.

Sharkey claimed she was let go in 2009 after telling her superiors she planned to recommend that JPMorgan Chase end its relationship with a client who had about $14 million at the bank. She testified she was worried the diamond seller who had also founded a phone calling-card business might have been involved in fraud and money laundering.

“I was fired the next day,” Sharkey testified in Manhattan federal court.

Rare Trial

The case marked a rare trial of Sarbanes-Oxley whistle-blower claims in a dispute that got its start in the months following the discovery that Bernard Madoff used JPMorgan Chase bank accounts in his Ponzi scheme. Because of a pretrial ruling by the judge, Sharkey wasn’t allowed to testify about client-screening procedures at JPMorgan Chase in the wake of the Madoff fraud.

"Of course I’m very happy -- 8 1/2 years," Sharkey said before the jury’s verdict was thrown into question by the judge.

Sharkey got her day -- a week, actually -- in court after years of delays, including two appeals that reinstated her claims. A judge who said at a pretrial hearing that he’d “do anything to get rid of this case” withdrew from the case and was replaced with Cote.

Jurors were forced to contend with an alphabet soup of letters that stood in for the names of people and companies. The client who raised Sharkey’s suspicions, for example, was referred to as Client A to protect his identity. Other characters in the story were given the names Client H, Manager T and Client BW.

Former Boss

Sharkey’s former boss, Leslie Lassiter, testified that she lied numerous times when asked if she’d contacted the office of another client and that was the reason for her firing. The client’s office manager called to complain that Sharkey hadn’t returned calls and asked whether the wealth manager was just “a phantom," according to Lassiter.

The trial quickly turned into a personal battle between Sharkey’s story and Lassiter’s. Each side accused the other’s star witness of lying.

Two JPMorgan Chase executives, Joe Kenney and Adam Green, were found by the jury not liable, conclusions the judge said she would leave intact.

Cote said she believed the fact the jury awarded the same amount in emotional damages as in back pay meant they were in fact trying to award punitive damages, against her instructions. She said she believed the evidence showed that Sharkey was fired for lying and that a rational jury couldn’t have found that she reasonably believed the diamond broker violated any laws, such as money laundering or fraud, spelled out in the Sarbanes-Oxley protections.

"It’s with sadness that I make these findings because I know you have all been engaged in a very long journey here," Cote said.

The bank’s legal team reacted with hugs and backslaps.

The case is Sharkey v. JPMorgan Chase & Co., 10-cv-03824, U.S. District Court, Southern District of New York (Manhattan).

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