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A Trader’s Federal Lawsuit Against JPMorgan Chase Offers a Window into the Crime Culture at the Five Felony-Count Bank

Donald Turnbull, a former Global Head of Precious Metals Trading at JPMorgan Chase, has filed a doozy of a federal lawsuit against the bank. Turnbull worked on the same JPMorgan Chase precious metals desk that was deemed to be a racketeering enterprise by the U.S. Department of Justice when it handed down indictments in 2019. This was the first time that veterans on Wall Street could recall employees of a major Wall Street bank being charged under the Racketeer Influenced and Corrupt Organizations Act or RICO statute, which is typically reserved for organized crime.

JPMorgan Chase, the largest bank in the United States, has the further unprecedented distinction for a U.S. bank of being charged with five felony counts by the Department of Justice in a six-year span of time, running from 2014 to 2020. The bank admitted to all of the charges while its Board kept Chairman and CEO, Jamie Dimon, at the helm throughout the unprecedented crime wave, giving the impression that crime is an accepted business model at the bank.

Turnbull’s lawsuit, filed earlier this month in the federal district court for the Southern District of New York, alleges that the bank trumped up false charges against Turnbull as a pretext to terminate him when it was actually terminating him for cooperating with the Department of Justice’s investigation.

Turnbull was not one of the traders that was indicted by the Department of Justice. Nonetheless, Turnbull states in the lawsuit that the indicted traders received better benefits when they were released from employment than he did. Despite a seriously-ill wife, Turnbull states in the lawsuit that JPMorgan Chase cancelled his health insurance, did not pay him severance, and took away his unvested stock awards.

The lawsuit offers multiple examples of how indicted traders were treated in a far more favorable manner than was Turnbull. One example, of many cited in the lawsuit, reads as follows:

“Trader C was employed by JPMorgan between 2008 and 2019. JPMorgan recognized that Trader C’s trading practices ‘could be perceived as spoofing’ when it began an internal investigation of his conduct in 2016. JPMorgan—having concluded that his conduct did not meet company standards—issued a verbal warning. But Trader C’s conduct so obviously violated JPMorgan’s ‘could be perceived as spoofing’ ‘standard’ that the Bank used examples of his order sequences in employee training materials as illustrations of how not to trade— because the conduct looked like spoofing. Nevertheless, JPMorgan retained him in its employ until he resigned three years later to plead guilty to eight years of spoofing, and a related CFTC enforcement action acknowledged that he placed ‘thousands’ of spoof orders.”

The lawsuit offers the court this analysis of why Turnbull had to be “neutralized.”

“Mr. Turnbull’s account lent credibility to the notion that the Bank itself was the most culpable entity in the alleged conspiracy; the risk he posed had to be neutralized…JPMorgan sought to reframe the narrative as though the defendants operated in their allegedly manipulative manner without JPMorgan’s knowledge.”

This is not the first time that an employee at JPMorgan Chase has alleged that they were fired and then framed for reporting wrongdoing.

In 2013, one of JPMorgan Chase’s licensed brokers, Johnny Burris, was employed in a JPMorgan Chase branch near Phoenix, Arizona. He complained that the bank was pressuring him to sell its own proprietary mutual funds to clients rather than allowing him the independence to select the funds that he felt were in the clients’ best interests. After Burris refused to sell the in-house funds, the bank terminated his employment. The bank then had one of its own employees draft bogus customer complaints against Burris and file them with FINRA, the self-regulator that also oversees Wall Street’s private justice system known as binding or mandatory arbitration, according to the New York Times. During the arbitration hearing, the JPMorgan employee denied that he had authored the claims for the customers.

In 2015, New York Times’ reporter Nathaniel Popper wrote an article on the Burris matter. Popper quoted the customers, by name, denying that they had made the complaints or had even seen the text of what they were supposed to have alleged against Burris.

In December 2015, the Securities and Exchange Commission appeared to validate the very complaints alleged by Burris, fining JPMorgan Chase $267 million and making it admit to wrongdoing. JPMorgan Chase paid an additional fine of $40 million to the Commodity Futures Trading Commission in a parallel action. Julie M. Riewe, Co-Chief of the SEC Enforcement Division’s Asset Management Unit, stated the following in the SEC’s announcement of the fine:

“In addition to proprietary product conflicts, JPMS [JPMorgan Securities] breached its fiduciary duty to certain clients when it did not inform them that they were being invested in a more expensive share class of proprietary mutual funds, and JPMCB [JPMorgan Chase Bank] did not disclose that it preferred third-party-managed hedge funds that made payments to a J.P. Morgan affiliate. Clients are entitled to know whether their adviser has competing interests that might cause it to render self-interested investment advice.”

There was also the case of Alayne Fleischmann, as Matt Taibbi detailed in a report for Rolling Stone in 2014. Taibbi summarizes the matter as follows:

“Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as ‘massive criminal securities fraud’ in the bank’s mortgage operations.”

Fleischmann, a lawyer, put her concerns in writing to management. Taibbi writes that she was “quietly dismissed in a round of layoffs” the following year.

The crime culture at JPMorgan Chase has another distinction. As far as we are aware, it is the only major bank on Wall Street to be compared to the Gambino crime family in a book authored by two trial attorneys.

In 2016 trial lawyers Helen Davis Chaitman and Lance Gotthoffer released the book JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook. In chapter 5 of the book, Chaitman and Gotthoffer provide this analysis: (JPMC stands for JPMorgan Chase.)

“In Chapter 4, we compared JPMC to the Gambino crime family to demonstrate the many areas in which these two organizations had the same goals and strategies. In fact, the most significant difference between JPMC and the Gambino Crime Family is the way the government treats them. While Congress made it a national priority to eradicate organized crime, there is an appalling lack of appetite in Washington to decriminalize Wall Street. Congress and the executive branch of the government seem determined to protect Wall Street criminals, which simply assures their proliferation.”

Chaitman and Gotthoffer then offered the path going forward:

“If Jamie Dimon is running a criminal institution, he should be prosecuted for it. And law enforcement has the perfect tool for such a prosecution: the Racketeer Influenced and Corrupt Organizations ACT (RICO).

“Congress enacted RICO in 1970 in order to give law enforcement the statutory tools it needed to prosecute the people who committed crimes upon orders from mob leaders and the mob leaders themselves. RICO targets organizations called ‘racketeering enterprises’ that engage in a ‘pattern’ of criminal activity, as well as the individuals who derive profits from such enterprises. For example, under RICO, a mob leader who passed down an order for an underling to commit a serious crime could be held liable for being part of a racketeering enterprise. He would be subject to imprisonment for up to twenty years per racketeering count and to disgorgement of the profits he realized from the enterprise and any interest he acquired in any business gained through a pattern of ‘racketeering activity.’ ”

But despite the unprecedented and recurring pattern of crime at JPMorgan Chase, neither the bank’s federal regulators nor its Board of Directors has seen fit to dismiss Jamie Dimon without health benefits, severance or unvested stock awards. Instead, the Board has made Dimon a billionaire while they are also richly rewarded.

(See If You’re Baffled as to Why JPMorgan Chase’s Board Hasn’t Sacked Jamie Dimon as the Bank Racked Up 5 Felony Counts – Here’s Your Answer.)

This was first published by Wall Street on Parade.

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