Mary Callahan Erdoes has watched one star executive after another climb to the highest rungs at JPMorgan Chase & Co. and then leave, either seizing other opportunities, retiring or getting shoved out.
But the bank’s asset- and wealth-management boss has remained a part of Jamie Dimon’s inner orbit — and JPMorgan’s powerful operating committee — longer than anyone else aside from the CEO himself. In April, the board praised her as it made her the firm’s highest-paid top executive after Dimon and the bank’s president Daniel Pinto.
Now the bank’s ultimate survivor is facing a challenge like none before.
Erdoes has been contending with a drip-drip of unearthed emails from JPMorgan’s dealings with Jeffrey Epstein, a man whose name alone is synonymous with a sordid group of ultra-connected and ultra-rich people.
Old missives poured out of a pair of highly contentious lawsuits that accused JPMorgan — via Erdoes’ division — of facilitating Epstein’s sex crimes for years after his initial arrest in 2006 and conviction for soliciting a minor for prostitution.
While no case named Erdoes as a defendant, discovery materials contained her messages with the now-deceased financier bantering about global weather, arranging a meet between the Gates Foundation and the bank, and even showing Epstein himself acknowledged his criminal record.
“I am well aware of my current unfortunate rainbow,” Epstein wrote to Erdoes and her predecessor and former mentor, Jes Staley, in an August 2011 email, some three years after pleading guilty to soliciting and procuring a minor for prostitution. “I am also aware that JPM has a colorful array of clients.”
After months of the lawsuits hanging over the biggest US bank and its top executives, JPMorgan on Monday signaled it’s looking to end the public back-and-forth. It reached an “agreement in principle” to settle one of the lawsuits, which alleged it knowingly benefited from Epstein’s sex-trafficking.
The deal with the victim, identified only as Jane Doe, doesn’t fully end JPMorgan’s battle. It still faces a similar lawsuit from the US Virgin Islands and is litigating its own cases against Staley.
Inside JPMorgan, the Epstein debacle isn’t the only setback Erdoes, 55, has encountered in recent years.
In 2019, JPMorgan launched a high-profile wealth-management growth initiative in a different unit. In doing so, the firm carved out its traditional brokerage business from Erdoes’ world and passed it to a colleague.
And last year, JPMorgan’s board publicly cut Erdoes’ 2021 bonus for using unapproved channels such as popular messaging apps to communicate with clients.
Across Wall Street, onlookers are debating what, if any, impact the ongoing scrutiny will have on the JPMorgan stalwart.
This account is based on interviews with more than two dozen current and former JPMorgan executives, who asked not to be named discussing internal matters.
“While we regret any association with Jeffrey Epstein, we would never have continued to business with him if we believed he was using our bank to commit heinous crimes,” JPMorgan spokesperson Darin Oduyoye said in a statement. “Mary Erdoes and others exited him as a client six years before he was charged with human trafficking.”
“Mary has always held herself and her colleagues to the highest standards of integrity and trust,” he said. “Her competence and character are top-notch, and she is consistently recognized as one of the top executives in financial services.”
The firm declined to make Erdoes available for an interview.
Recall Effort
The latest flare up for Erdoes came after Dimon, America’s king of banking, was deposed on May 26, peppered with questions about his interactions with Erdoes and whether she made the call to maintain the Epstein relationship. Her name is mentioned at least 59 times in the transcript.
Then just last week, lawyers for an Epstein victim suing JPMorgan asked the judge to recall both Dimon and Erdoes for fresh depositions, citing an important document produced in discovery after the CEO’s testimony.
“Jane Doe is entitled to additional time to question Erdoes concerning her relationship with Epstein,” Sigrid McCawley, the Jane Doe victim’s lawyer, wrote in a letter filed in federal court in Manhattan on Friday.
JPMorgan’s then-general counsel Stephen Cutler had said in his own deposition that she and Staley had decided to keep Epstein as a client. Dimon, grilled at the bank’s New York offices, called Cutler the “ultimate decider” who could have overruled Staley and Erdoes.
“You had a good relationship with Mary Erdoes?” asked David Boies, managing partner of Boies Schiller Flexner.
“Yes,” Dimon said. “And I still do.”
Staley Focus
JPMorgan, vigorously fighting the plaintiff’s claims, has said it was Erdoes who ultimately kicked Epstein out. The bank has sued Staley, who himself was deposed this weekend, saying he was responsible for keeping the sex offender as a client for so long.
Epstein and Staley allegedly palled around. One of the suits claims Staley met many of Epstein’s trafficking victims and saw Epstein “sexually grabbing” some.
At first, the bank defended Staley, who went on to become CEO at Barclays Plc. But in a sudden shift, JPMorgan filed its own suit in March as a third-party complaint seeking to blame Staley for its dealings with Epstein. The firm accused Staley of concealing an “inappropriate relationship” with Epstein for years and demanded the executive hand back eight years of compensation and bear the cost of any payouts in the two lawsuits.
Staley called JPMorgan’s allegations “baseless” and “slanderous” in a motion to separate the suit against him from those against his former firm. The banker has consistently denied knowledge of Epstein’s abuse.
His lawyer did not respond to a request for comment for this story.
Hot Seat
Since Epstein’s death in a New York jail cell in 2019, the bank had said Erdoes only recalls formally meeting him on one occasion, when she fired him as a client at his New York townhouse in 2013.
But recent discovery materials show another in-person meeting there in 2011, related to a lawsuit Epstein had filed against JPMorgan that Erdoes has privately said she forgot about, according to people familiar with the matter. The Wall Street Journal reported earlier on her visits to Epstein’s townhouse.
The public scrutiny is rare for Erdoes, who joined JPMorgan nearly three decades ago shortly after graduating from Harvard Business School.
The daughter of a Chicago investment banker, she at first led fixed-income investing for endowments, foundations and wealthy individuals. Erdoes rose through the private bank — which Staley oversaw beginning in 1999 — to become its chief in 2005.
“The private bank was a pretty demoralized place,” Staley said in a 2013 interview, describing the unit when he took over. When he would walk the unit’s six floors late at night, “amid the sea of empty desks, this one young woman was always there,” he said, referring to Erdoes.
When Staley was tapped to lead the investment bank in 2009, he recommended Erdoes to replace him overseeing all of asset management. She got the job and joined JPMorgan’s top leadership body, advancing to the upper echelon of Wall Street at a time when there were few women atop the industry.
By 2014, she was considered a potential successor to Dimon. Erdoes also became an ambassador to the firm’s most important clients, and continues in that role: last month, she represented Dimon at a meeting with French President Emmanuel Macron.
Bear Brokerage
There have also been some stumbles.
Among the relationships cultivated by Erdoes’ unit: Adam Neumann, founder of WeWork Inc. The unraveling of its initial public offering in 2019 and Neumann’s fall from grace were massive headaches for JPMorgan. (Apple Inc.’s WeWork miniseries includes an actor portraying Dimon telling Neumann to consider him his personal banker — a conversation a JPMorgan spokesperson said never happened.)
Read more: JPMorgan’s WeWork IPO Pursuit Many Years and Loans in Making
That same year, Dimon created a new division to fix a weak link in JPMorgan’s empire — catering to the merely wealthy, who don’t quite qualify as ultra-rich. The priority effort was launched in a different business line.
The new wealth-management unit, the firm said, would fall under Kristin Lemkau, reporting up through the consumer and community bank and its then-leader, Gordon Smith, who was also JPMorgan’s co-president.
Dimon has long had a special affinity for the retail brokerage, inherited when the bank took over Bear Stearns, because his father and grandfather were both brokers. The former worked at JPMorgan from 2009 until a few months before his death in 2016.
“We do really well in the ultra-high net worth space where we typically have 4% market share, but if we’re thinking of that mass affluent, affluent space, our share is less than half of that,” Smith said at a conference in 2021. “It’s an area that Jamie really asked us to start focusing on more aggressively and we’re already seeing some pretty good momentum.”
When JPMorgan acquired First Republic during this year’s banking crisis, adding its roster of affluent clients, the firm specified that the failed lender’s private wealth management platform would become part of the unit Lemkau oversees.
Art, Emails
Erdoes has also scored some major wins over her 14 years running the asset- and wealth-management arm, which notched record revenue in each of the last five years.
Assets under management have more than doubled under her watch, albeit at a slower rate than BlackRock Inc., its biggest competitor. Her unit has taken over five companies since 2020 as part of a firmwide acquisition spree. And, in a nod to what made Erdoes a star in the first place, JPMorgan’s cache among the world’s richest remains unparalleled, even as competitors have ramped up their efforts in wealth management.
Erdoes’s efforts to win over key clients begin before they walk in the door. She carefully considers each step of the process, down to how they enter JPMorgan’s offices, which are decorated with pieces from the firm’s top-tier art collection.
A champion of “work-life integration,” Erdoes also hosts an exclusive annual holiday party for top JPMorgan executives and clients at her Tribeca home. This past December, celebrity guests included Alex Rodriguez, according to people familiar with the matter. Attendees have spanned finance, crypto and entertainment, with billionaire Bob Kraft among those to have have been spotted in past years, one of the people said.
To top it off: She’s famously quick with follow-up emails.
Gates Connection
It’s emails, though, that are the foundation of her current troubles.
Epstein portrayed himself as a close adviser to billionaire Bill Gates in emails to Erdoes and Staley, according to documents obtained by Bloomberg. Erdoes became involved in mid-2011 about an idea to bring the Gates Foundation to JPMorgan and launch a donor-advised fund.
“I am more than happy to meet with anyone you think moves this along,” including “cutler, jamie, etc.,” Epstein wrote to Staley and Erdoes in August. “As mary said it need to be PROPER.” (There’s no indication such meetings ever occurred, and Dimon said in his deposition that he never met or knew Epstein.)
In early September, Epstein pointed out issues with JPMorgan’s pitch to the foundation.
As always, Erdoes responded with a quick — if terse — reply.
“I have this,” she wrote.
Months before JPMorgan kicked Epstein out in 2013, the bank was hit with a pair of sanctions ordering it to fix its anti-money-laundering compliance. A firmwide effort to address the concerns included weekly risk meetings in Erdoes’ unit — with an eye toward cracking down on the firm’s roster of clients.
Around the same time JPMorgan dropped Epstein, it also booted some less obvious targets. One was a wealthy lawyer who was arrested decades earlier — for selling marijuana in college.
--With assistance from Sridhar Natarajan, Greg Farrell and Ava Benny-Morrison.
(Updates with settlement in eighth paragraph.)