J.P. Morgan Fined $200M by SEC & CFTC Over Messaging and Communications Violations
J.P. Morgan Securities Will Pay $125M to the Commission
J.P. Morgan has arrived at two settlements over recordkeeping and communication violations. These violations included using unapproved channels, such as WhatsApp and personal texts messages. One settlement is with the US Securities and Exchange Commission (SEC) and the other with the Commodity Futures Trading Commission (CFTC). The firm has admitted to the violations.
The settlement with the SEC is with J.P. Morgan brokerage firm subsidiary, J.P. Morgan Securities, LLC for failures by the company and its employees to maintain and preserve written communications. In addition, the broker-dealer will pay a $125M penalty and enhance its compliance policies and procedures to resolve the issue.
The brokerage firm acknowledged that from at least 1/2018 through 11/2020 employees communicated about business-related matters through their personal devices, including on WhatsApp, through text messaging, and in personal email accounts.
The broker-dealer did not preserve these records, which it was required to by law. J.P. Morgan Securities acknowledged that the use of these unapproved avenues of communication was common knowledge and practice, including among its senior-level employees and supervisors.
CFTC Settlement Involves Three of the Broker-Dealer’s Firms and a $75M Fine
The settlement with the CFTC is with J.P. Morgan Chase Bank, N.A., J.P. Morgan Securities, Plc, and J.P. Morgan Securities, LLC. J.P. Morgan will pay a $75M fine. The regulator said there was a failure to “maintain, preserve, and produce records.”
From at least July 2015, employees communicated on unapproved channels, such as WhatsApp and personal text messaging, and included business-related messages.
The brokerage firm admitted to the failures and violations, including that it had violated regulations (such as the Commodity Exchange Act (CEA)), and the firm’s own policies and procedures.
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