SEC Takes Action Against J.P. Morgan Securities And Investment Management
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The Securities and Exchange Commission (SEC) announced that it charged J.P. Morgan Securities LLC (JPMS) and J.P. Morgan Investment Management Inc. (JPMIM), two parts of JPMorgan Chase & Co., in five enforcement cases. These charges include failures to disclose information to investors, not acting in the best interest of clients, and unauthorized transactions.
According to the SEC’s report, JPMS and JPMIM agreed to pay over $151 million in penalties and payments to investors for four of these cases. The SEC did not give a penalty in one case because JPMS worked closely with investigators and took steps to correct issues.
SEC Aims To Ensure Investor Protection Through Enforcement Actions
Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement, stated, “JP Morgan’s actions broke laws designed to protect investors from risks like conflicts of interest.” Wadhwa added that the settlements, which included self-reports and payments to affected investors, show that JP Morgan is being held responsible for these issues.
According to the SEC’s report, JPMS misled investors in its “Conduit” private funds, which collected money from customers to invest in private equity or hedge funds.
The order said that JP Morgan controlled when and how much of these shares would be sold, putting investors at market risk. Some shares lost value over time. JPMS agreed to pay $90 million to about 1,500 investor accounts and a $10 million penalty to be shared with these investors.
The SEC’s order also found that JPMS did not disclose incentives for recommending its Portfolio Management Program over other advisory programs. Between July 2017 and October 2024, assets in this program rose from $10.5 billion to over $30 billion. JPMS will pay a $45 million penalty for this.
SEC Strives To Uphold Fair Practices In Financial Markets
The SEC reported that, from June 2020 to July 2022, JPMS recommended high-cost mutual funds to its retail customers, even though cheaper options were available.
The SEC noted that JPMS did not check if these recommendations were in the best interest of the customers. No penalty was given because JPMS quickly reported this to the SEC, ran an internal check, and repaid about $15.2 million to impacted customers.
In a separate case, the SEC found that in March 2020, JPMIM conducted $4.3 billion in prohibited transactions that benefited a foreign fund it managed over three U.S. funds. For this, JPMIM will pay a $5 million penalty.
The SEC also revealed that JPMIM carried out or enabled 65 unauthorized trades from July 2019 to March 2021. These trades had a total value of $8.2 billion.
The SEC said these trades went against rules meant to prevent conflicts of interest. JPMIM will pay a $1 million penalty for this case.
These enforcement actions were led by members of the SEC’s Asset Management Unit under the supervision of Andrew Dean, Corey Schuster, and Sheldon L. Pollock.
