The 2nd U.S. Circuit Court of Appeals has revived the lawsuit brought by a whistleblower who accused JPMorgan Chase & Co. (JPM) of firing her for cautioning that a client might be engaging in money laundering and fraud. Jennifer Sharkey was a private wealth manager and vice president at the firm when she was let go in August 2009.
Sharkey claims that she was terminated a week after telling JPMorgan that they needed to pay attention to “red flags” and let go of the client who was responsible for about $600K of yearly billings. She sued her former employer after she was fired.
Last year, U.S. District Judge Robert Sweet in Manhattan threw out the case. Sweet said that the firm may have let Sharkey go for other reasons, including allegations that she lied about communications with another client or her performance was poor. Sharkey has countered that she did not lie.
That was not the first time that Sweet had dismissed Sharkey’s whistleblower lawsuit. The first time was in 2013. His dismissal in 2015 was after the appeals court had put into place a more lenient whistleblower protection standard.
Now, however, the second circuit has said that the “close temporal proximity” between Sharkey’s firing and the warning she provided to JPMorgan about the client warrants for allowing the case to move forward. The appeals court pointed to her status as a whistleblower and that this was an “issue of fact” that needed to be settled during trial.
Sharkey filed her case under the 2002 Sarbanes-Oxley Act’s whistleblower provisions. The provisions gives protections to whistleblowers who provide information about shareholder fraud, securities fraud, bank fraud, mail fraud, wire fraud, or SEC rule violations. For example, the Act prohibits retaliatory action against a whistleblower by his/her employer. Such actions could include termination, demotion, suspension, harassment, threats, or other forms of discrimination.
JPMorgan whistleblower case revived by the U.S. appeals court, WHTC.com, September 12, 2016
Court reinstates whistleblower retaliation claim against JPMorgan, Insurance Journal, September 13, 2016
Sarbanes-Oxley Whistleblower Protections, Government Accountability Project