JPMorgan Chase Affiliates Hit with $151 Million in Penalties for SEC Violations
The U.S. Securities and Exchange Commission (SEC) has taken action against two affiliates of JPMorgan Chase & Co. (JPM) for a variety of regulatory breaches. The SEC’s charges, spanning five separate enforcement actions, resulted in a combined penalty and investor restitution exceeding $151 million.
The SEC accused J.P. Morgan Securities LLC and J.P. Morgan Investment Management Inc. of engaging in practices that violated investor protection laws. These violations included:
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Misleading disclosures to investors:
The SEC found that J.P. Morgan Securities made misleading statements to customers who invested in its Conduit private funds products. This resulted in complaints from clients after the value of certain shares plummeted.*
Breach of fiduciary duty:
The SEC alleged that the JPMorgan affiliates failed to act in the best interests of their clients, specifically regarding their fiduciary duty responsibilities.*
Prohibited joint transactions and principal trades:
The SEC discovered that the affiliates engaged in prohibited transactions, including joint transactions and principal trades, without proper disclosure or compliance.Holding JPMorgan Accountable
As part of the settlement, the JPMorgan affiliates agreed to pay over $151 million, which includes a $90 million voluntary payment to more than 1,500 Conduit investor accounts. Additionally, J.P. Morgan Securities will pay a $10 million civil penalty, which will also be distributed to Conduit investors.
While the firm did not admit to or deny the SEC’s findings, it agreed to resolve the actions. Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement, stated that JPMorgan’s conduct across multiple business lines violated laws designed to safeguard investors from self-dealing and conflicts of interest. He added that the settlements, including self-reporting and substantial payments to harmed investors, hold JPMorgan accountable for its regulatory failings.
Market Impact
JPMorgan shares experienced a slight increase of 0.09% at $222.13 per share following the announcement, according to Benzinga Pro. This SEC action highlights the importance of regulatory compliance in the financial industry, particularly in protecting investors from potential misconduct and conflicts of interest.
