On JPMorgan’s C-Suite Epstein Fibs Are Nothing New

Quick. Which of JPMorgan’s top executives are telling the truth about its ties to Jeffrey Epstein and which ones are lying?

The idea that all the bankers can be believed became harder to swallow last week when Chief Executive Jamie Dimon said he never discussed the convicted sex offender and prized client. Jes Staley, Dimon’s former senior lieutenant, and current JPMorgan punching bag, says Dimon did.

Running a huge bank is a tough job. People get to do it because they’re good at making money, not because they’re challenging George Washington for the Most Truthful American Award.

But even in the pantheon of Wall Street spin, JPMorgan's bosses are starting to look like over-achievers. To hear Dimon talk about how his bank conducts business is to hear staccato repetition of the word “client.” Clients, clients, clients. We do it all for them…

When it comes to clients, who could be more near-and-dear to the hearts of upper-crust bankers than their fellow upper-crusters? JPMorgan execs referred to Jeffrey Epstein as a “center of influence” for introducing such people to the bank.

In 2015, JPMorgan paid $300 million and admitted wrongdoing to settle charges by U.S. securities regulators that it failed to tell these same folks that its "advice" was steering them into its own products. That is, its priority was making money for the bank, not for its clients. Shocker.

Two years later its arch-rival, Wells Fargo, was up to its eyeballs in scandal for forcing its own products on clients. I did some digging at the time and found that JPMorgan actually did more cross-selling per client than Wells Fargo.

Offering various products under one roof can be a good thing. It’s why I go to Home Depot. But I wouldn’t keep going back if, when I ducked in for a light bulb, I got pressured to buy the sometimes crummy or over-priced house brand.

As for Jes Staley, he was a star at the bank for years, frequently named as a possible Dimon successor. Buddying up to Epstein was hardly his first brush with scandal. A decade ago, Staley was at the center of a dispute involving JPMorgan’s deal to help American Century sell its funds into corporate 401(k) plans.

After the pact went sideways, arbitrators found that JPMorgan had “stacked the deck” in favor of its own funds and let its salesmen run roughshod over its duty to protect retirement savers. The breaches “extended from James E. “Jes” Staley, head of Asset Management at the time, on down,” they found. JPMorgan denied wrongdoing but paid $384 million to settle the matter in 2012.

When Staley left the bank, Mary Erdoes took over as its Epstein handler. The Wall Street Journal reported on April 21 that Erdoes “has previously said through a JPMorgan spokesman that the only time she remembered meeting Epstein was the day she fired him as a client of JPMorgan’s private bank.”

Her memory-fog aside, the paper wrote, Erdoes “made two trips to Epstein’s townhouse on Manhattan’s Upper East Side.” She also “exchanged dozens of emails with him and discussed?sharing with him fees related to a charitable fund the bank was considering launching.”

Underscoring Erdoes’ close relationship with Epstein is her reply to an email he sent her from California, requesting a late-night call.

“Seriously. It is 1 a.m. your time. I would say get a life … but you are at the Ritz and we aren’t,” Erdoes responded.

My own reporting suggests the truth has long been a slippery thing for JPMorgan's wealth management boss. Years ago, I dug into claims she made in JPMorgan’s annual reports about its in-house funds out-performing most rivals. The bank did not show its work.

More objective scorers, like Morningstar, rated its funds as so-so performers. But you don’t rise to the heights of Wall Street for claiming so-so returns. You get there for doing what you gotta do to make your employer money. Clients beware.