By Jonathan Stempel
NEW YORK (Reuters) - A federal appeals court on Monday revived a former JPMorgan Chase & Co <JPM.N> private banker's whistleblower lawsuit accusing the bank of firing her in retaliation for warning that an Israeli client might be committing fraud.
The 2nd U.S. Circuit Court of Appeals in New York found enough evidence to suggest that former JPMorgan employee Jennifer Sharkey had a "reasonable belief" that the client was engaged in fraud and money laundering involving Colombia.
Sharkey said she was fired as a vice president and wealth manager in August 2009, just a week after formally urging the bank to heed "red flags" and sever its ties with the client, who generated about $600,000 of annual billings.
The client was not identified in court papers. Sharkey was terminated eight months after the multibillion-dollar Ponzi scheme of longtime JPMorgan client Bernard Madoff was exposed.
U.S. District Judge Robert Sweet in Manhattan dismissed Sharkey's lawsuit last October.
Sweet said JPMorgan could have fired Sharkey based on her performance, or for having purportedly lied about communications involving another client. Sharkey disputed having lied.
But the appeals court said the "close temporal proximity" between Sharkey's warning and her firing justified letting the case continue. It also said her qualifications as a whistleblower was an issue of fact to be resolved at trial.
The court returned the case to Sweet's courtroom.
JPMorgan spokesman Darin Oduyoye said the bank believes the lawsuit is without merit, and looks forward to presenting its case in court.
Lawrence Pearson, a partner at Wigdor LLP representing Sharkey, said he was pleased with the decision and looks forward to a trial.
Sharkey had sued under the whistleblower provisions of the 2002 Sarbanes-Oxley corporate governance law.
Sweet had dismissed Sharkey's case in December 2013. Last October's dismissal came after the appeals court in the interim imposed a more lenient standard for whistleblower protection.
JPMorgan agreed in January 2014 to pay $2.6 billion to settle litigation over Madoff, and in a deferred prosecution agreement with the U.S. government acknowledged responsibility for failing to stop him.
The case is Sharkey v. JPMorgan Chase & Co et al, 2nd U.S. Circuit Court of Appeals, No. 15-3400.
(Reporting by Jonathan Stempel in New York; editing by Grant McCool)