Dimon, JPMorgan board defeats shareholders’ Epstein lawsuit

(Reuters) – A federal judge has dismissed a shareholder lawsuit accusing JPMorgan Chase CEO Jamie Dimon and his board of directors of ignoring red flags surrounding disgraced former client Jeffrey Epstein.

In a Wednesday evening decision, U.S. District Judge Jed Rakoff said shareholders led by Miami and Pittsburgh pension funds failed to first ask the bank’s board directly to address their concerns or show it would be futile to do so, before suing.

The Manhattan-based judge said he will explain his reasoning in due course. Judge Rakoff did not address specific accusations about the largest U.S. bank’s relationship with Epstein, who died by suicide in a Manhattan jail in August 2019 while awaiting trial for sex trafficking.

Lawyers for the shareholders did not immediately respond to requests for comment.

Shareholders had accused Mr. Dimon, seven other directors and Jes Staley, a former private banking and investment banking chief, of having “put their heads in the sand” as the financier used his accounts to further abuse young women and girls.

The so-called derivative lawsuit sought to have the defendants or their insurers pay damages to JPMorgan, for the benefit of shareholders.

Rakoff is also overseeing two Epstein-related lawsuits against JPMorgan by the U.S. Virgin Islands, where the financier owned two neighboring islands, and by his victims.

The U.S. Virgin Islands is seeking at least $190 million in damages, while a $290 million settlement with victims awaits final court approval.

JPMorgan is suing Mr. Staley, who has expressed regret for his friendship with the financier and denied knowing about his sex trafficking, to cover its losses in both lawsuits.

Mr. Staley was also Barclays’ CEO from 2015 to 2021.

The case is City of Miami General Employees & Sanitation Employees Retirement Trust et al v. Dimon et al, U.S. District Court, Southern District of New York, No. 23-03903.