JPMorgan will now pay investors a whopping $150 million in violations and penalties combined after the SEC flagged the banking giant for its breach of fiduciary duty.
On Thursday, the U.S. Securities and Exchange Commission (SEC) revealed that it has charged two affiliates of JPMorgan Chase & Co. in five separate enforcement actions, resulting in over $151 million in penalties and voluntary payments to affected investors.
The SEC cited several violations, including misleading disclosures to investors, breaches of fiduciary duty, prohibited joint transactions and principal trades, as well as failures to prioritize customers’ best interests.
While the JPMorgan affiliates agreed to pay the penalties and restitution, they did not admit or deny the findings outlined in the SEC’s orders.
Sanjay Wadhwa, acting director of the SEC’s Division of Enforcement, stated, “JPMorgan’s conduct across various business lines violated laws meant to protect investors from self-dealing and conflicts of interest.”
He emphasized that the settlements, which included self-reports and significant voluntary payments to harmed investors, hold JPMorgan accountable for its regulatory shortcomings.
One enforcement action against JPMorgan Securities revealed that the firm provided misleading information to customers who invested in its Conduit private funds products.
This led to client complaints after the value of certain shares dropped significantly.
To resolve this, JPMorgan Securities agreed to make a voluntary payment of $90 million to over 1,500 Conduit investor accounts and pay a civil penalty of $10 million, also designated for Conduit investors.
The SEC noted that JPMorgan failed to disclose its complete discretion over the timing and quantity of shares sold, which exposed customers to market risks, particularly when prices decreased due to delays in share sales.
Additionally, JPMorgan was fined $45 million for not fully disclosing how the bank and its brokers could financially benefit from recommending certain in-house investments over comparable third-party products from July 2017 to October 2024.
In response, the New York-based bank expressed satisfaction with the settlement, stating it addresses issues as they arise and aims to maintain high standards in client service.
The SEC also accused JPMorgan of recommending mutual funds to 10,500 retail brokerage customers while less expensive but equivalent exchange-traded fund (ETF) options were available, according to Reuters.
JPMorgan voluntarily reimbursed these customers $15.2 million and was not fined for this issue after self-reporting it, according to the SEC.
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