JPMorgan agreed to pay a total of 200 million penalties to settle regulatory violations related to its widespread recordkeeping and supervision failures.
On Friday, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) disclosed that J.P. Morgan Securities LLC (JPMS) admitted the charges against it.
The broker-dealer subsidiary of JPMorgan Chase & Co. (NYSE: JPM) said failed to maintain, preserve, and produce records particularly the communications of its employees about its securities businesses on their personal devices using text messages, WhatsApp, and personal email accounts.
Its conduct is a violation of Section 17(a) of the Securities Exchange Act of 1934 and Rules 17a-4(b)(4) and 17a-4(j) thereunder. It is also a violation of the Commodity Exchange Act (CEA) and regulations.
The SEC and the CFTC imposed monetary penalties of $125 million and $75 million respectively, against JPMorgan. Both regulators also required the company to cease and desist from future violations of the said laws and regulations.
Additionally, the firm agreed to conduct a comprehensive review of its policies and procedures related to the preservation of its employees’ electronic communications regarding its business found on their personal devices.
In a statement, SEC Division of Enforcement Director Gurbir Grewal said, “Recordkeeping requirements are core to the Commission’s enforcement and examination programs and when firms fail to comply with them, as JPMorgan did, they directly undermine our ability to protect investors and preserve market integrity.”
The division’s Deputy Director Sanjay Wadha added, “As today’s order reflects, JPMorgan’s failures hindered several Commission investigations and required the staff to take additional steps that should not have been necessary. This settlement reflects the seriousness of these violations. Firms must share the mission of investor protection rather than inhibit it with incomplete recordkeeping.”
On the other hand, CFTC Acting Director of Enforcement Vince McGonagle commented, Firm compliance with recordkeeping and associated supervision requirements is essential to the CFTC’s efforts to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets.”
Last year, JPMorgan Chase agreed to pay a civil penalty of $250 million for engaging in unsafe and unsound business practices related to internal controls and internal audits of fiduciary duties. The Office of the Comptroller of the Currency (OCC) imposed the penalties against the firm.