He Blew the Whistle at JPMorgan Chase, Then Came the Blowback | Hacker News Reader

He Blew the Whistle at JPMorgan Chase, Then Came the Blowback

nytimes.com

173 pointsphonon50 comments

It still amazes me how people have absolutely no problem stealing or screwing people. I mean, no guilt whatsoever. If you look at the history of how a lot of people have made their money many of them have accumulated their money by methods that I would consider theft (or screwing people) even if technically legal. The robber barons provide rich evidence of what I'm talking about. Even in current times you can find them, although no longer called such.

Guilt is not problem everyone suffers from. Some only behave just well enough to avoid criminal trouble. They have no problem separating a fool from his money, what you label as "screwing people".

Since this is tax evasion, the 'fool' you are referring to in this scenario is basically any honest American taxpayer. Those honest tax payers are the ones who are funding transport, education, healthcare, infrastructure, subsidies and welfare in America and are therefore making the world a better place for everyone.

There is a huge difference between being a fool vs being misinformed. It's sick how some people in this society can equate 'honesty' with 'foolishness'. Honesty is the fabric which holds our society together.

Another way of looking at this is these executives didn't necessarily agree to the "social contract," they were simply born into it. There is frequently a rather pervasive attitude that life is competition and any rules were made to be broken.

Also, many would disagree that welfare makes the "world better for everyone." A more competitive outlook would say welfare simply encourages dysgenics on a massive scale and multiplies problems.

> Another way of looking at this is these executives didn't necessarily agree to the "social contract," they were simply born into it. There is frequently a rather pervasive attitude that life is competition and any rules were made to be broken.

All criminals think that way.

> It is related that Cherry Nose Gio, rescued from drowning, spit in the lifeguard's face: "Crumb! Worka fora living.”

The Place of Dead Roads by William S. Burroughs

Hardly limited to criminals. "I never agreed to the social contract" is a pretty frequent sentiment on HN, too.

Hard to want to do business with someone that's looking to screw me over at every opportunity. That's the problem with america today a handshake don't mean what it used to.

I think some level of welfare is necessary. When you're born into poverty, you have very little control over your life - Getting out of it is nearly impossible. Society should account for this.

People born into poverty also didn't agree to any "social contract" - They were screwed from the beginning.

Their parents initially accepted the contract for them, since obviously newborn babies can't be fully-autonomous legal entities.

Most "executives" are part of a socioeconomic class who could have left for a different society/jurisdiction if they had wanted to. Staying and then quietly flaunting the "contract" is, if not "fraud", at least acting in bad-faith.

True, but since 2008 at least, I think any level headed rich person would have to take any promises made by JP Morgan with a grain of salt. They might get screwed but they might still get the best return on their investment compared to more honest alternatives. It's still a choice to make in where you put your money.

Everything I hear about investment banks is that their job is to rip off rich people. If you don't like that, then use a regular bank and get a regular couple of percent interest.

> If you don't like that, then use a regular bank and get a regular couple of percent interest.

It's not that simple when you have retail banks and investment banks all tangled up.

today they're called #-mafia. as in PayPal-mafia.

It's skewed by media reporting this. You don't read articles that someone is working 9-5 and never screw anyone.

I think it's important to recognize that all this happened on the fringes of JPM - this appears to be some private wealth branch office. Small brokerage outposts like this are generally rife with issues - they have less supervision (frequently a single broker with their supervisory license) and even in better supervised conditions brokers spend the majority of time out of the office and away from the eye of compliance. Compounding the issue is older brokers who are used to different norms in the business - which explain some of his complaints on the broker's FINRA record: more aggressive selling (his suitability complaints), phone orders (the late order entry complaint), etc. Even though he was vindicated, this type of record is common for brokers in these roles. I suspect that is why they chose these specific trumped up charges against him.

I am waiting for the article that tackles the issues at these branch offices head on.

Is it really limited to the branch offices?

Over the years, JP Morgan has been fined $35 billion.

http://www.dividend.com/dividend-education/a-brief-history-o...

And that's just for the cases the government caught and proved.

Some of those things have been for things that weren't even illegal. The dance between Wall St and regulators is a delicate one, and shouldn't really be viewed in the same way as your everyday civil case.

Which were for things that weren't illegal?

They also probably haven't been fined for things that actually should be illegal, just because it's hard to write regulation that captures otherwise obvious ill-intent.

I honestly will never understand this kind of apologia.

> And that's just for the cases the government caught and proved.

"caught and proved" can also be read as "alleged and settled". In virtually every one of those cases, nothing was "proved" in a court of law. Allegations were made, and JP Morgan agreed to a settlement. They are certainly not guiltless, but it is far less cut and dried than you make it out to be.

Please stop with this nonsense apologia. If JP Morgan was not guilty it would fight at least one of these many cases in court. Virtually every time they settle, which means they are either guilty or the settlements are so low that they don't matter.

Lol, just like all those other people who are offered plea bargains and take them? They all guilty, right, otherwise they'd fight in court?

i somehow doubt jp morgan lacks the means to fight them

You mean to say JP Morgan is appointed a lowly paid public defender and intimidated into a plea deal?

This is nonsense. $35B is certainly enough money to stop and fight for, if they thought otherwise. The idea that "nothing was proven" is preposterous, they are certainly guilty not just "not guiltless".

No, it really isn't. It is just money, an actual judgement, especially these days, can lead to actual market bans which is then a death sentence for the firm. The flip side of this is that US governments (Federal and State) are able to effectively shake down large financial firms for very large sums of money without actually holding any individual to account - it just becomes part of "doing business".

I'm not in any way saying that JPMorgan doesn't deserve some/all of those penalties but don't mistake what has happened to them for justice.

working in private banking, can confirm this is very true. regulators(=government) can shut you down in a minute, for a single action taken by a single employee, who somehow manages to break all possible rules in the company. the environment changed drastically in last 8 years (in many ways in good direction for customers, but it certainly raised costs massively, and guess who pays these costs)

A "certain famous bank" got away with no criminal indictments, after having committed all sort of crimes, including recycling money for drug cartels.

It's been publicly stated that (cough cough) if such bank would have lost the license, it would have been too much of a big hit for the economy (cough cough).

So, to say that regulators "can" shut a bank down in a minute is true, but disingenuous to say the least.

Why would you settle in court when you were innocent? I consider agreeing to a settlement to be akin to a statement of guilt, but you don't? Why not?

The fights are often more expensive than the settlements, and these settlements have gone from a rare black mark to being a cost of doing business.[1]

Similar discussions are common in the criminal law, and it is well-known that a large number of people plead guilty to crimes they did not commit; people do this because the costs to themselves and to their families are much higher if they fight the charges than if they just plead guilty.

[1] http://www.ft.com/cms/s/0/802ae15c-9b50-11e3-946b-00144feab7...

lawyers fees dont cost billions (yet)

You'd be surprised: http://www.thewire.com/business/2014/04/heres-how-much-ameri...

Those numbers include settlements.

> This quarter, some banks paid out so much in litigation fees — including billable hours, court costs, and settlement payouts

Quoting littletimmy above: You mean to say JP Morgan is appointed a lowly paid public defender and intimidated into a plea deal?

In the criminal law there is a big difference between accepting a plea bargain, which generally involves the accused allocuting in open court and admitting to wrongdoing, and pleading no contest which is specifically not an admission of guilt, but a pragmatic decision that the costs borne fighting the charge outweigh the benefits.

It probably doesn't apply to this case, but surely you have heard of people settling rather than face an expensive and focus draining fight?

It is well known that tax regulators prefer to settle out of court, to avoid lengthy and very expensive court cases.

Out of court settlements allow them to get some of the tax back; put a bit of pressure on the trading entity; and not force closure of that trading entity which would probably cause some disruption.

I think that's the wrong approach because those trading entities have shown that they continue to break the laws where they want to.

This is a good point. Professional firms where the company is really tons of smaller companies sharing a balance sheet are always tough to wrap your head around in general.

Maybe related: A top salesperson's commissions often makes them one of the highest paid persons in the org chart. Upper management always ends up thinking they can be replaced with cheaper people. So it gets very classically political.

Can confirm. Friend of mine was cut out of a seven figure bonus weeks before the payout. Apparently he had no recourse legally either.

And it's not just salespeople, a number of early stage engineers at Zynga were cut out of their equity / options entitlements by being relieved of duty just before the IPO; "got to be in it to win it" clauses in their employment contracts enabled this.

Point in lesson, always make sure accelerated vesting (equity, options, bonuses) clauses for not at fault firing, retrenchment, redundancy are in your employment contract.

"I think it's important to recognize that all this happened on the fringes of JPM"

Disingenuous excusing :)

Valid point except I worked at the largest wealth management firm in the world in a major office.

Cocaine, hookers, money launderering, investment in drugs, executives selling (small amounts) of drugs and all kinds of related craziness.

People are people, and we are a flawed bunch.

> That may mean a big payday for Mr. Burris. If the S.E.C. deems he gave it “original information” the leads to a successful enforcement action, he ... would be entitled to a bounty of ... $20 million to $60 million.

I wasn't aware the S.E.C. had a bounty program in place. That's quite the amount, probably more than he could have made in a lifetime at JP Morgan.

The IRS have something similar, Bradley Birkenfeld received more than $100M when he blew the whistle against UBS.

https://en.wikipedia.org/wiki/Bradley_Birkenfeld

"Then Mr. Burris’s lawyer asked — twice — whether “someone at JPMorgan” had written them. Ms. Kazmi testified, “absolutely not.”"

...

"And, with respect to Ms. Kazmi’s testimony that no one at JPMorgan had drafted the letters, she “answered truthfully based on what she knew — she did not realize that anyone had provided the customer with the courtesy of typing up a verbal complaint or issue,” Ms. Wexler said."

Absolutely is a definitive. It means you DO know.

The capacity and willingness of financial institutions to completely fuck everyone over repeatedly and consistently must be a universal constant at this point.

It is wonderful when honest people are vindicated.

I was hoping for a nice outrage inducing story, but this one left too much ambiguity about who was really at fault for me.

If you see this as ambiguous, then you are either seriously impaired or perhaps working for jpmorgan. After he quit and filed a complaint against jpmorgn, jpmorgan created three false complaints against the former employee. Then basically lied about it. They are about to pay a $200 million fine for what he alleged they were doing. jpmorgan is all wrong here.

Your comment would be much nicer without the first sentence.

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