J.P. Morgan Securities and JPMorgan Chase Bank agreed to jointly pay over $300 million to settle SEC and US Commodity Futures Trading Commission charges that the two J.P. Morgan wealth management subsidiaries failed to disclose conflicts of interest to investors. The SEC payment includes $127.5 million in disgorgment, a $127.5 million penalty, and nearly $12 million in interest. The CFTC payment includes a $40 million penalty.
According to the investigation, J.P. Morgan Securities preferred J.P. Morgan-managed mutual funds for its retail investors through a Chase Bank program and failed to disclose this preference. The findings also state J.P. Morgan failed to disclose that pricing and availability of services was tied to the amount of assets invested in J.P. Morgan products, and that these conflicts of interest existed.
Investigators also found that J.P. Morgan Securities failed to implement written policies and procedures related to the aforementioned violations.
As relates to JPMorgan Chase Bank, the SEC found several additional failures to disclose conflicts of interest, including a failure to disclose preference for JPMorgan-managed mutual funds, hedge funds, and investments in third-party-managed hedge funds that shared management/performance fees called retrocessions with a JPMorgan Chase Bank affiliate.
The SEC concluded that these disclosure failures denied clients all the facts needed to make fully informed investment decisions.
If you have invested with J.P. Morgan or with a firm, broker or financial adviser whose failure to disclosure material facts, such as the existence of a conflict of interest, has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.
Press Release: J.P. Morgan to Pay $267 Million for Disclosure Failures (Securities & Exchange Commission)