By Jonathan Stempel
NEW YORK (Reuters) -JPMorgan Chase will pay $151 million to settle five U.S. Securities and Exchange Commission enforcement cases, including accusations that the largest U.S. bank made misleading disclosures to brokerage customers, the regulator said on Thursday.
The settlements include $61 million of civil fines and $90 million of reimbursements to customers. JPMorgan did not admit or deny wrongdoing in agreeing to the settlements.
“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, acting director of the SEC enforcement division, said in a statement.
In the largest settlement, JPMorgan will pay a $10 million civil fine and reimburse $90 million to customers who invested in “conduit” products.
These products pooled customer money to invest in private equity or hedge funds that would later distribute shares of companies that went public.
The SEC said JPMorgan did not disclose that it had complete discretion over when to sell shares and how many to distribute. It said this exposed customers to market risk, including when prices fell because the bank took months to sell the shares.
JPMorgan was separately fined $45 million for failing to fully disclose from July 2017 to October 2024 how the bank and its brokers could benefit financially by recommending some in-house investments over similar products managed by third parties.
In a statement, the New York-based bank said it was pleased to settle, strived to uphold high standards when serving clients, and fixes problems when they arise.
The SEC also accused JPMorgan of recommending some mutual funds to 10,500 retail brokerage customers when materially less expensive but otherwise identical exchange-traded fund (ETF) products were available.
JPMorgan voluntarily repaid those customers $15.2 million, and was not fined after reporting the issue, the SEC said.
