On May 23, 2012, Ernesto Espinoza, a JPMorgan Chase shareholder, sent a letter to the Board demanding an investigation of the "London Whale" debacle and pointedly asked for an investigation of the:
On March 31, 2014, SDNY dismissed the Complaint for failure to state a claim because the pleading did not show that the Board had failed to exercise appropriate business judgment in rejecting the demand. Espinoza had asked for leave to amend if his Complaint were dismissed but SDNY declined that option and entered judgment for the Defendants.
On appeal, the United States Court of Appeals for the Second Circuit ("2Cir") noted (with much disapproval) that it was constrained to review the SDNY's dismissal only for abuse of discretion and not via the more expansive de novo review. Pursuant to that more restrictive review, the 2Cir concluded that SDNY did not abuse its discretion by dismissing the complaint; and,accordingly, affirmed the grant of the motion to dismiss. Because Espinoza failed to identify new allegations that fix the problem with his original Complaint, 2Cir affirmed SDNY's decision to implicitly deny leave to amend.