Two JPMorgan subsidiaries agreed to pay more than $151 million to settle a series of Securities and Exchange Commission claims faulting how they handled clients’ money, disclosed fees and allowed some prohibited transactions.
JPMorgan Securities and JPMorgan Investment Management agreed to make the payments — including penalties and relief paid to investors — to resolve four civil cases, the agency said in a statement Thursday. The securities unit also settled a fifth case — alleging it steered more than 10,000 retail customers into pricey mutual fund investments despite there being cheaper alternatives — without a financial sanction. The agency credited the bank’s cooperation and that it reimbursed customers.
READ MORE:JPMorgan posts surprise NII gain, raises key revenue viewEx-JPMorgan advisor ordered to stop soliciting clients for Wells FargoJPMorgan shuffles top private bank leadersJPMorgan wealth unit sees slight increase in profits as overall profits rise
“JPMorgan’s conduct across multiple business lines violated various laws designed to protect investors from the risks of self-dealing and conflicts of interest,” Sanjay Wadhwa, the acting director of the SEC’s enforcement division, said in the statement. “JPMorgan is being held accountable for its regulatory failures.”
The biggest punishment — a $10 million fine plus $90 million in reimbursements — was for allegedly misleading brokerage customers who invested indirectly in outside funds advised by private equity or hedge funds. The funds often bought shares in early stage, private companies that eventually became publicly traded. Fund managers held on to the stocks for prolonged periods, leaving JPMorgan customers exposed to “substantial market risk and material declines in value,” the SEC said.
The agency also said JPMorgan or its staff misled customers about fees reaped from certain products and allowed some prohibited transactions that advantaged an affiliated foreign money market fund, in which JPMorgan served as a portfolio manager, over three money market mutual funds it advised.
The company didn’t admit or deny wrongdoing in its settlement.
The firm identified and mended flaws and worked with regulators to resolve concerns, a company spokesperson said in an emailed statement.
“JPMorgan Chase strives to uphold the highest standards in client service around the world,” the spokesperson said. “We are pleased to have these matters resolved and remain dedicated to delivering an exceptional experience for our clients.”
— With assistance from Hannah Levitt.
