- The settlement includes a $10 million fine and $90 million in reimbursements.
- JPMorgan allegedly failed to disclose its control over share sales timing.
JPMorgan Chase agreed to pay $151 million to settle five enforcement cases with the US Securities and Exchange Commission (SEC). The regulator’s announcement this week highlighted significant disclosure lapses affecting investors, with settlements including $61 million in civil fines and $90 million in reimbursements.
While JPMorgan has not admitted to any wrongdoing, the SEC alleged the bank’s practices involved risks and conflicts that were not fully transparent to investors. The regulator’s largest settlement with JPMorgan concerns a $10 million fine and $90 million in customer reimbursements related to “conduit” products.
These investment products pooled customer funds to back private equity or hedge fund ventures, ultimately distributing shares in companies that went public. According to the SEC, JPMorgan failed to disclose its full control over when and how many shares to sell, which left customers vulnerable to market swings, especially when sales were delayed for extended periods.
“JP Morgan’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, the Acting Director of the SEC’s Division of Enforcement, said. “With today’s settlements, which include multiple self-reports and large voluntary payments to harmed investors, JP Morgan is being held accountable for its regulatory failures.”
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Fines For Conflicts In Investment Recommendations
The SEC imposed an additional $45 million fine against JPMorgan for not fully disclosing conflicts in its investment recommendations from July 2017 to October 2024.
The regulator highlighted that the investment banking giant and its brokers could benefit from recommending certain in-house investment products over similar offerings managed by third parties, potentially altering the advice clients receive in favor of the bank’s financial interests.
JPMorgan’s settlements underscore ongoing SEC efforts to scrutinize transparency practices in financial institutions, especially concerning potential conflicts of interest that may compromise client trust. The SEC’s actions aim to enforce higher standards of disclosure, reminding firms of the critical importance of transparent, unbiased advice in their dealings with investors.
The settlement marks another instance in which large financial institutions face regulatory action over complex investment products and advice practices, signaling an increasing focus on investor protection within the regulatory landscape.
