When Wall Street Watchdogs Hunt Whistle-Blowers

You’ve probably never heard of Peter Sivere, a former compliance officer at JPMorgan Chase & Co. (JPM)

Yet his distressing story shows — on a personal level — that for all the tough talk about better enforcement of financial wrongdoing, just how tightly government regulators are aligned with the big Wall Street banks they are supposed to keep an eye on.

In January 1998, Sivere joined JPMorgan as a surveillance analyst in the compliance department of the fixed-income group. In December 1999, Sivere was promoted to vice president and then again to be the “team leader” of electronic-communications compliance. On Sept. 26, 2003, Sivere received his annual review and a rating of 9.63, or “great,” according to the bank’s evaluation scale.

“I consider Peter to be a brilliant surveillance analyst,” one of his colleagues wrote. “Peter is highly motivated and diligent individual with an exceptional work ethic.”

Despite that review and the promotions, things had actually started going off the rails, careerwise, for Sivere earlier that month, when then-New York State Attorney General Eliot Spitzer filed a complaint against Canary Capital Partners LLC, a (now defunct) New Jersey hedge fund and a big client of JPMorgan. The suit held that Canary had engaged in “late trading” of mutual funds — that is, it was allowed to buy shares of mutual funds at the day’s final price even though the market had closed. Canary’s late trading was akin to getting tomorrow’s Wall Street Journal today.

Rest here…