By Jonathan Stempel

NEW YORK A federal judge has dismissed a shareholder lawsuit accusing JPMorgan Chase Chief Executive 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. Rakoff did not address specific accusations about the largest U.S. bank's relationship with Epstein.

Epstein 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 Dimon, seven other directors and Jes Staley, a former private banking and investment banking chief, of having "put their heads in the sand" as Epstein used his accounts to further abuses of 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 Epstein 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 Staley, who has expressed regret for his friendship with Epstein and denied knowing about his sex trafficking, to cover its losses in both lawsuits.

Staley was also Barclays' chief executive 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.

(Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)