A federal judge dismissed a whistleblower lawsuit by a former J.P. Morgan Chase & Co private banker who said she was fired for questioning the dealings of a lucrative client.
US District Judge Robert Sweet nonetheless offered a broad view of protections offered to whistleblowers under the Sarbanes-Oxley corporate governance law, saying they cover cases involving alleged wrongdoing by a third party, not just by an employer. The Manhattan judge's ruling could expand the ability of employees to raise claims of fraud and other wrongdoing to their employers without fear of retaliation. Last year's Dodd-Frank financial regulation overhaul also expanded protections and incentives offered to whistleblowers.
In the J.P. Morgan case, the plaintiff Jennifer Sharkey was a vice president who said her August 2009 firing came after the New York-based bank resisted her call to drop a longtime Israeli client who generated $600,000 of annual business. Sharkey contended she was punished for her role in an internal probe into the client's alleged involvement in mail fraud, bank fraud and money laundering.
In his ruling, Sweet said the plaintiff failed to properly allege a Sarbanes-Oxley claim because she did not identify the specific illegal conduct forming the basis of her whistleblower complaint. But he said the statute "should not be read narrowly," given it was designed to promote corporate ethics and protect whistleblowers from retaliation.
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