On June 1, Sivere was given the choice of either leaving the firm immediately as a result of his “insubordination” or continuing to work at the firm under a “final written warning” agreement. On June 4, Sivere told a compliance officer at the bank that he thought he was being retaliated against for questioning the firm’s cooperation with the SEC investigation. JPMorgan opened an internal investigation, and placed Sivere on paid leave, with no access to his computer, pending its outcome.
On June 13, Sivere contacted an SEC lawyer, George Demos, by email, seeking to become a whistleblower. Sivere asked if he would be able to collect whatever “bounty” the law permitted for trying to do the right thing. (He used the indelicate email address Bountyman04aol.com.)
Demos informed Sivere that no bounty was available; yet Sivere decided to turn over emails he had come across in his investigation to the SEC anyway. Sivere believed the emails showed JPMorgan had violated securities laws. (Sivere also later filed a complaint with OSHA, claiming that he had been discriminated against for turning over emails to the SEC.)
Not surprisingly, Sivere was demoted from team leader when he returned to work on July 19. But he continued to monitor emails about the SEC’s investigation into late trading. In early October, he accessed more emails from JPMorgan executives relating to the firm’s relationship with Canary, including one dated Oct. 4, from Jamie Dimon, now the chairman and chief executive officer. Dimon’s missive asked Joan Guggenheimer, co-general counsel, to tell him the “exact timing” of the firm’s involvement with Canary and the loans that were made to help Canary finance its late trading of mutual funds.
On Oct. 7, JPMorgan fired Sivere for inappropriate use of the firm’s email. OSHA eventually determined that JPMorgan had retaliated against Sivere and ordered him reinstated. Instead, Sivere and the bank settled for $350,000. After an arbitration hearing, JPMorgan was ordered to change the description of Sivere’s firing on his U-5 form from “mutual consent” and “for accessing emails without authorization” to “a disagreement regarding the scope of his authority.” Sivere struggled to find work, but is now with Barclays Plc in New York. “Today, I believe my past experience and desire to do the right thing should be an asset,” he told me recently. “Wall Street executives talk about ‘tone at the top’ and ‘culture’ but, unfortunately, the people who monitor those things are at risk more than most people realize.” (As I have said before, I, too, worked for JPMorgan and unsuccessfully took it to arbitration over my firing in 2004.)
That would be the end of the horrific story, except that as part of the OSHA investigation, Sivere discovered in May 2005 that Demos, the SEC lawyer, had informed JPMorgan’s lawyers that Sivere had asked the SEC for a bounty as a whistleblower. Demos also gave permission and “actually encouraged” that this bit of information be used in the lawsuit between JPMorgan and Sivere.
This was, of course, blatantly in violation of SEC rules. The SEC’s inspector general investigated the matter and corroborated that Demos had ratted out Sivere, but the agency took no disciplinary action against Demos.
As usual, truth is stranger than fiction. The epilogue to the story is that early this year, Demos announced he was seeking the Republican nomination for a seat in the House from an eastern Long Island district. His slogan: “Fighting for Freedom.” In May, Demos gave up his fight, claiming that he wanted to spend more time with his fiancée.
With a little luck, the SEC will adopt Demos’ unused slogan in what little effort it makes these days to crack down on Wall Street wrongdoing.
William D. Cohan , the author of “Money and Power: How Goldman Sachs Came to Rule the World,” is a Bloomberg View columnist. He was formerly an investment banker at Lazard Freres, Merrill Lynch and JPMorgan Chase.