J.P. Morgan Securities has come to an agreement to pay $18 million following allegations that it prevented retail clients in its advisor and broker channels from contacting the Securities and Exchange Commission (SEC) regarding possible violations of securities laws.
Confidential Release Agreements The SEC claims that between March 2020 and July 2023, JPMorgan Chase's unit regularly required clients who were receiving credits or settlement payments exceeding $1,000 to sign confidential release agreements. These agreements prohibited them from disclosing any information about the conduct at hand to the SEC.
Violation of Individual Rights Gurbir Grewal, Director of the SEC's Division of Enforcement, emphasizes that preventing individuals from approaching the SEC with evidence of wrongdoing is unacceptable. He states that J.P. Morgan allegedly enforced this by placing certain clients in a difficult position where they had to choose between accepting settlements or credits while not reporting potential securities law violations to the SEC.
Grewal strongly believes that J.P. Morgan's approach not only compromised investor protections but also contravened the law.
It is worth noting that J.P. Morgan Securities has acknowledged its wrongdoing and has taken steps to address this issue, now resolving to pay the $18 million fine.
JPMorgan Settles SEC Allegations Without Admission of Guilt
JPMorgan has reached a settlement with the Securities and Exchange Commission (SEC) regarding allegations of violating whistleblower-protection rules. The company agreed to pay a fine but has neither admitted nor denied the SEC's findings.
Taking Regulatory Obligations Seriously
In a statement, JPMorgan emphasizes its commitment to fulfilling regulatory obligations promptly. The company acknowledges the issue and states that appropriate actions were taken to resolve it.
Violation of Whistleblower-Protection Rule
According to the SEC, at least 362 clients of J.P. Morgan Securities signed releases that restricted their ability to contact the commission since 2020. This action is considered a violation of the whistleblower-protection rule introduced under the Dodd-Frank Act.
The settlements or credits given to these clients ranged from approximately $1,000 to $165,000, as stated by the SEC.
Limited Communication with the SEC
Although clients were not prohibited from responding to the SEC's inquiries, these releases prevented them from independently contacting the agency regarding any issues.