JPM lawsuits against ex-banker over Epstein ties make legal and PR sense: experts
JPMorgan’s (JPM) offensive this week against two lawsuits tying the bank to late financier Jeffrey Epstein are savvy legal and public relations moves, legal experts say.
On Wednesday, the banking giant filed third-party complaints against its former investment banking chief, James “Jes” Staley, in response to the suits that claim the bank knew Epstein was trafficking and abusing girls and financially benefited from its relationship with Epstein – allegations that JPMorgan denies.
“It looks so much better for them to be throwing [Staley] under the bus,” University of Iowa corporate law professor Robert Miller said about JPMorgan’s new filings. “And this is a much more aggressive way of throwing him under the bus.”
One of the suits that now includes Staley as a third-party defendant was brought against the bank by a woman who says she was abused in Epstein’s decades-long trafficking scheme. The other was filed against the bank by the U.S. Virgin Islands’ attorney general.
Jane Doe claims that after befriending Epstein, Staley “observed victims personally,” and promised to “use his clout within JPMorgan to make Epstein untouchable.”
In detailing the rationale behind the third-party complaints, a JPMorgan spokesperson said: “The plaintiffs have made troubling allegations concerning the conduct of our former employee Jes Staley, and if true, he should be held responsible for his actions.”
Kathleen Harris, an attorney for Staley from Arnold & Palmer, declined to comment on JPMorgan’s claims.
In JPMorgan’s complaint the company says the former executive breached his fiduciary duty as a company employee by engaging in inappropriate conduct in his personal dealings with Epstein. The actions, the bank says, were concealed from JPMorgan and outside the scope of Staley’s employment, making him liable to reimburse the company if any damages result from the pair of underlying cases.
“At the time, we could not have imagined any of our employees would engage in the type of conduct alleged,” JPMorgan said in response to a request for more detail concerning the actions against Staley. “If these allegations against Staley are true, he violated this duty by putting his own personal interests ahead of the company’s.”
JPMorgan’s filings are on solid legal footing, aside from their bold nature, Rutgers Law School professor Jay Feinman told Yahoo Finance. If the plaintiffs prevail against JPMorgan, Staley may be liable to JPMorgan under a variety of legal theories, he said.
Generally, an employee’s legal duties to an employer are those of an agent and fiduciary, requiring the employee to act honestly, to abide by the law, and to act in the best interest of the company.
“JPMorgan has to prove that Staley breached that fiduciary duty, and as a consequence, is liable to the plaintiffs,” Feinman said about a scenario where either of the plaintiffs prevail.
Miller added that by litigating its claims against Staley together with the claims of the plaintiffs, JPMorgan is in a better position to argue that Staley’s alleged wrongdoing violated his fiduciary duties.
“If Staley hijacks his agency in order to pursue girls with Jeffrey Epstein, then he is pursuing his personal interests and not JPMorgan’s interest,” Miller said. “And that’s a breach of his fiduciary duty.”
In 2019, Epstein was found dead of an apparent suicide in a New York jail where he was awaiting federal trial on sex-trafficking charges.
JPMorgan has requested that both of the cases against it be dismissed, arguing that their claims are misplaced and without merit.
Staley resigned as CEO of Barclays last year after British regulators announced an investigation into his ties with Epstein.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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