By Pam Martens and Russ Martens: January 31, 2025 ~

The International Consortium of Investigative Journalists (ICIJ) has gotten its hands on a blockbuster 35-page letter that a former JPMorgan banker sent to the bank’s Audit Committee of the Board of Directors in August 2023. The letter asserts that the bank has been ginning down the amount of capital it is required to hold by improperly using an accounting technique called “netting.” The whistleblower asserts that “this could have allowed JPMorgan Chase to generate an additional $2 billion in net income in one year alone.”

The whistleblower indicates that he/she brought this alleged malfeasance to bank officials in 2018 but was “ultimately retaliated against and laid off in 2022.”

That is becoming a common refrain by whistleblowers inside JPMorgan Chase: they say they are rewarded for bringing improper, or brazenly illegal, conduct to the attention of their superiors by being shown the exit door.

Consider what we reported in October 2022:

“The plaintiff in the case is Shaquala Williams, an attorney and financial crimes compliance professional with more than a decade of experience at multiple global banks. The defendant is JPMorgan Chase – the largest bank in the U.S. which has been charged with five felony counts by the U.S. Department of Justice since 2014. Despite the bank’s unprecedented crime spree, federal regulators and the Board of Directors of JPMorgan Chase have allowed the same Chairman and CEO, Jamie Dimon, to continue to run the bank.

“Williams charged in her lawsuit that JPMorgan Chase was keeping two sets of books and effectively making a monkey out of the U.S. Department of Justice by brazenly flouting the non-prosecution agreement it had signed with the Justice Department in a previous case. It came out in her deposition testimony, which is part of the court record, that one of the people being paid under her allegation of the bank keeping two sets of books was Tony Blair, the former Prime Minister of the U.K. (See our report: JPMorgan Whistleblower Names Former U.K. Prime Minister Tony Blair in Court Documents as Receiving ‘Emergency’ Payments from Bank.)”

Williams’ lawsuit also charged that the bank retaliated against her protected whistleblowing activities by terminating her employment after she raised concerns about the improper payments.

Like so many other federal lawsuits alleging brazen crimes at JPMorgan Chase, the Williams case ended up before Judge Jed Rakoff in the U.S. District Court for the Southern District of New York. And like so many other cases against JPMorgan Chase, Rakoff allowed the lawsuit to be settled with a vast array of documents remaining under seal. (See Judge Jed Rakoff Has Regularly Dined in the Past with the Chairman of the Law Firm that Just Got a Big Win in His Court in the JPMorgan Sex Trafficking Case.)

Then there was the federal lawsuit brought by Donald Turnbull, a former trader on the precious metals desk at JPMorgan Chase. Turnbull alleged that the bank trumped up false charges against him as a pretext to terminate him when it was actually terminating him for cooperating with the Department of Justice’s investigation of illegal precious metals trading at the bank. 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 alleges in the lawsuit that JPMorgan Chase cancelled his health insurance, did not pay him severance, and took away his unvested stock awards when they terminated him.

This would also not be the first time that JPMorgan Chase has been alleged to have engaged in dodgy tactics to reduce the amount of capital it must hold. The Office of Financial Research (OFR) called the bank out for just such an issue in a June 2015 report.

The Office of Financial Research was created under the Dodd-Frank financial reform legislation of 2010 to make sure that Wall Street megabanks would never again ravage the economy and financial system of the United States — as they did in 2008 – by engaging in reckless derivative trades and toxic bets. OFR describes its mission as follows:

“Our job is to shine a light in the dark corners of the financial system to see where risks are going, assess how much of a threat they might pose, and provide policymakers with financial analysis, information, and evaluation of policy tools to mitigate them.”

Buried in OFR’s June 2015 report was a bombshell. When JPMorgan Chase was initiating hundreds of billions of dollars in risky derivative trades in London in 2012, using deposits from its federally-insured bank in the U.S., it was attempting to engage in tricked-up capital relief trades. This outrageous gamesmanship resulted in $6.2 billion in losses at the bank; an investigation by the FBI; embarrassing Senate hearings; a scathing 300-page report by the U.S. Senate’s Permanent Subcommittee on Investigations; charges of engaging in “unsafe and unsound” banking practices by the Office of the Comptroller of the Currency; and the payment of $920 million in fines to its regulators.

The OFR researchers wrote this in their June 2015 report:

“Despite limited public data, post crisis, there is reason to believe banks continue to use credit derivatives for capital relief. JPMorgan Chase & Co.’s losses in the 2012 London Whale case were the result of CDS [Credit Default Swap] usage which was undertaken to obtain regulatory capital relief on positions in the trading book. SEC staff said in early 2015 they were evaluating potential transactions at other banks akin to those that resulted in JPMorgan’s losses. Additionally, banking regulators have observed that banks’ use of high-cost credit protection could only be economically viable if the cost of the risk weights on the asset in question were high. Specifically, the Federal Reserve said in a 2011 supervisory letter that regulators would scrutinize high-cost transactions and could disallow favorable regulatory capital treatment in some cases.”

Clearly, JPMorgan Chase and its long-tenured Chairman and CEO, Jamie Dimon, believe they have nothing to fear from the U.S. court system, the Department of Justice, or their regulators.