A securities lawyer whose whistleblower case against J.P. Morgan led to the largest-ever settlement between the U.S. government and another entity told Financial News that it’s essential for any potential whistleblower to consult with a lawyer before doing anything.
Alayne Fleischman, whose allegations that her former employer knowingly sold faulty mortgage investments that ultimately contributed to the 2008 financial crisis, is considered one of the most successful whistleblowers in the world. Rolling Stone described her as “J.P. Morgan’s worst nightmare” when her case against J.P. Morgan led to the record settlement, costing the financial giant $13 billion.
Between 2006 and 2008, Ms. Fleishman worked as a deal manager at the bank, where, according to Rolling Stone, she “first witnessed, then tried to stop, what she described as ‘massive criminal securities fraud’ in the bank’s mortgage operations.”
As witness to the staggering fraud, she reached a breaking point and knew she would have to expose the misconduct despite the consequences, which indeed came fast and were severe. Gagged by legal conditions and blocked at every turn, Ms. Fleischman’s life became the kind of living hell that many whistleblowers find themselves in.
“I tried to go on with the things I was doing, but I just stopped sleeping and couldn’t eat,” Ms. Fleischman told Rolling Stone. “It felt like I was trying to keep this secret and my body was literally rejecting it.”
When asked about what advice she would give others who also feel the need to blow the whistle, Ms. Fleishman advised getting a lawyer to help navigate the treacherous landscape whistleblowers often find themselves in. “You can find yourself at odds with a company that has almost limitless resources, lawyers, and influence,” she told Financial News. “If you look at prior whistleblowers, many lose not only their jobs but also their careers.”
Before anything, Ms. Fleischman said she “would try very hard to avoid working at any place that has a reputation for an unethical culture.”
However, she said, “If you do find yourself in the position of having to blow the whistle, you should talk to a lawyer before you do anything at all.”
Ms. Fleischman told the Financial News that even though she won her case and J.P. Morgan paid a record penalty, justice still was not done.
“I’m still hopeful that, with enough public pressure, criminal cases will be brought against the individuals responsible, not just at J.P. Morgan but also at the other banks that sold fraudulent securities,” she told Financial News, indicating that whistleblowers have their work cut out for them in the future.
“My fundamental concern is that these banks are using their lawyers, lobbyists, and PR groups to protect individuals who should clearly be charged and tried in a court of law. The Constitution and the Rule of Law require that every person is equal before the law, regardless of their wealth or power. As long as these individuals are shielded from accountability for the damage that they’ve done, then their victims — in many cases the retirement funds of ordinary, hard-working Americans — will be left without justice and these sorts of illegal activities will, as we’ve already seen, continue to happen over and over again.”