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This is an audio transcript of the FT News Briefing podcast episode: The battle inside JPMorgan over A-Rod’s millions

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, December 14th, and this is your FT News Briefing.

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US labour officials are investigating whether Apple broke the law by retaliating against a whistleblower. And there could be a new hurdle for Russia’s Nord Stream 2 gas pipeline. Plus, we have an inside view of JPMorgan, and it’s not pretty. Our banking editor has the story of infighting among powerful financiers over a famous athlete’s fortune.

Joshua Franklin
It’s very rare that you see a dispute like this take place in public, as this one is.

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

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The FT reports that Apple is under investigation by US labour officials. They’re looking into claims that the technology giant retaliated against an employee who publicly accused Apple of a variety of workplace violations. A senior engineering programme manager had been tweeting allegations of harassment, surveillance and work safety issues. Apple fired her in September, allegedly for leaking confidential information. She said that she was dismissed under false pretext. An employment lawyer told the FT that these investigations are rare because of the use of non-disclosure agreements and it’s also rare for these disputes to be made public.

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It’s also rare for employee battles inside a US banking titan to be made public, but a spat inside JPMorgan Chase broke open after a top financial adviser filed for a restraining order against the bank to restrict her co-workers from engaging with her clients. The financial adviser in question manages the fortune of one of the most famous baseball personalities of all time, former Yankee slugger Alex Rodriguez or A-Rod. Our US banking editor Josh Franklin joins me to talk more. Hey, Josh!

Joshua Franklin
Hey, Marc.

Marc Filippino
So Josh, at the centre of this dispute is a woman named Gwen Campbell. She’s A-Rod’s financial adviser and she’s the one who manages his multimillion-dollar fortune. She was at Merrill Lynch about a year ago, and then JPMorgan lured her over. And Josh, why don’t you take it from here?

Joshua Franklin
What happened really was when Campbell was a very high-profile financial advisor at Merrill Lynch with about $1.1bn in client assets, JPMorgan was very keen to get her over to their bank. But JPMorgan has this slightly complicated dynamic where you have two separate businesses that do similar things. You have JPMorgan’s private bank, which sits within its asset and wealth management division. And then you have JPMorgan Advisors, which sits within a separate JPMorgan wealth management business, and they are under separate leadership. And Gwen Campbell was joining the JPMorgan Advisor business, but what happened when she moved over and brought her clients with her is that the private bank began soliciting her clients, and she argued that this is in violation of her contract when she joined JPMorgan and is now filing for a restraining order against JPMorgan to stop her colleagues from doing this. All the while, she’s also pursuing legal damages against JPMorgan.

Marc Filippino
Obviously not a great look for the bank. So is this situation unique or is it part of a broader cultural issue at JPMorgan?

Joshua Franklin
Well, so in her legal filing requesting the temporary restraining order, Gwen Campbell argues that it is a pattern of behaviour that’s taken place for years. And certainly some of my own reporting does suggest that the relationship between JPMorgan Advisors and JPMorgan’s private bank is not harmonious. I’ve had people tell me that it feels like you’re working for two separate businesses. There’s very little integration between the two sides. There is also collaboration, but certainly there is a lot of tension that exists when you’re going after similar clients and you have different business lines doing this.

Marc Filippino
So Josh, why is this an issue at JPMorgan? Is there something unique about the bank that creates this?

Joshua Franklin
It’s interesting. It’s, part of it is just kind of the flaw of the big bank model. And with JPMorgan, you know, it’s a, it’s a bank that is the product of multiple mergers over many decades. So this is JPMorgan Chase, as it exists today, is several different banks kind of stitched together. And what’s making this particularly acute right now for JPMorgan is really this structure where you’ve got these competing businesses inside the same bank goes back to the Bear Stearns acquisition that people might remember JPMorgan made in 2008 during the financial crisis. It was a, it was really a shotgun acquisition for JPMorgan to help bail out Bear Stearns. And this kind of brought inside the bank a business that was kind of competing with a business that JPMorgan already had. And here we are 13 years later, and it’s still never been fully integrated into JPMorgan. So you kind of got this odd situation inside.

Marc Filippino
But you know, JPMorgan isn’t the only US bank to have gone through mergers. How come this isn’t a problem that other Wall Street firms or is it a problem at other banks?

Joshua Franklin
Yeah. So interestingly, you’re quite right. It’s not just a problem that exists at JPMorgan. If you look at someone like Bank of America, which also had another kind of rushed M&A transaction during the crisis when it bought Merrill Lynch, you know, has a similar dynamic where it has a private bank and then within Bank of America, it also has Merrill Lynch, which is a similar dynamic as JPMorgan has. Interestingly, Gwen Campbell, you know, she from that point of view, should be familiar with this kind of dynamic. She came from Merrill Lynch, where she was there for a number of years and built up her business there, so has, you know, experience navigating these kinds of conflicts. But it seems like whatever’s going on at JPMorgan for her seems particularly difficult.

Marc Filippino
So this saga over A-Rod’s millions, you know, let’s go back to that for a second. How does it all end?

Joshua Franklin
So for JPMorgan and Gwen Campbell now the endgame is going to be arbitration. Gwen Campbell last week filed for arbitration proceedings against JPMorgan to sort this out through mediation. And that would give her, presumably if she wins, some kind of financial compensation. She argues, though, that this situation can’t just be remedied through financial compensation, that’s why she’s seeking the restraining order. She feels like this is damaging her credibility in the industry and can cause irreparable harm to her, her reputation. So that’s something also that simultaneously is going to work its way through the courts.

Marc Filippino
Joshua Franklin is our US banking editor. Thank you, Josh.

Joshua Franklin
Thanks very much, Marc.

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Marc Filippino
Germany’s foreign minister may have jolted energy markets yesterday. European gas futures jumped 11 per cent after Annalena Baerbock, also leader of Germany’s Green Party, said the Nord Stream 2 pipeline couldn’t go ahead as planned because it doesn’t comply with EU law. Nord Stream 2 is owned by Russian energy company Gazprom. It’s been built to pipe gas from Russia into Germany under the Baltic Sea. Now this is just the latest delay. Last month, Germany threw up a bureaucratic hurdle. Now, a new coalition government in Berlin has other reasons to block it as well. Here’s the FT’s Berlin bureau chief Guy Chazan.

Guy Chazan
The main problem is that you now have a party in the government, the Greens, who have always been opposed to Nord Stream 2 and really have said and they campaigned on a promise basically to block it. And they now are incredibly powerful and influential in the government. They control the foreign ministry and also the economics ministry. So it’s going to be difficult for them to just wave this through regardless of the situation in Europe with rising energy prices and scarcity of gas.

Marc Filippino
That’s the FT’s Berlin bureau chief Guy Chazan.

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Before we go, Harley-Davidson motorcycles are famously loud, but in the past few years it’s been making motorcycles that sound more like this.

[HARLEY-DAVIDSON ELECTRIC MOTORCYCLE SOUND PLAYING]

That’s a Harley-Davidson electric motorcycle, and the company is now spinning off this part of the business. Harley plans to list its electric motorcycle unit on the stock market through a merger with a blank cheque company known as a Spac. These financial vehicles have been popular for EV start-ups who want to raise cash on public markets, but Harley could face some potholes. The investor frenzy over Spacs has cooled, and so has their eagerness to plough money into shares of electric vehicle start-ups.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.

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