JPMorgan is suing to take back eight years of compensation from former executive Jes Staley over his links to sex offender Jeffrey Epstein. It isn't a great look, but the bank led by Jamie Dimon has more reasons than most to defend itself: Unmack1
The bank’s response is therefore aggressive. If JPMorgan loses either of the lawsuits in which it is a defendant, it wants Staley to share in the damages. Even if it doesn’t, Dimon’s firm wants to recoup Staley’s pay since 2006, a figure estimated at over $80 million, on the grounds that he was a faithless servant of the bank, a concept sometimes used in New York courts when an employee acts gravely against the company’s interest. That goes far beyond the three-year cut-off under U.S.
Such action could backfire. Current or future employees might worry they too could find themselves branded a faithless servant for failing to disclose moral missteps, or having clients who fall from grace. But JPMorgan also has other clients, depositors, regulators and politicians to soothe. The wealthier a kingdom gets, the more ferocious its defences.
The claim seeks to recover from Staley any damages JPMorgan might suffer if it loses a separate case brought by a woman who says she was a victim of Epstein’s “sex-trafficking venture”. JPMorgan says that, based on the allegations in the two cases, Staley breached his fiduciary duty to the bank and violated the “faithless servant doctrine” by not reporting his relations with Epstein and by vouching for him as a client. Staley left the bank in 2013, and subsequently became chief executive of Barclays.Opinions expressed are those of the author.
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