Ex-J.P. Morgan rep: Firm pushed house funds

Claim says supervisers dogged him for selling nonproprietary products

Jun 16, 2013 @ 8:31 am

By Dan Jamieson

A former J.P. Morgan broker has filed an arbitration claim alleging that the bank's securities unit encouraged sales of proprietary funds by withholding commissions from brokers on trades of outside funds.

The claim, filed last month with the Financial Industry Regulatory Authority Inc. by Bryant Tchan against J.P. Morgan Securities LLC, said that an internal-review system flagged trades in nonproprietary funds and required brokers to respond to inquiries from the system within 30 days or risk losing compensation.

A former J.P. Morgan broker has filed an arbitration claim alleging that the bank's securities unit encouraged sales of proprietary funds by withholding commissions from brokers on trades of outside funds.

The claim, filed last month with the Financial Industry Regulatory Authority Inc. by Bryant Tchan against J.P. Morgan Securities LLC, said that an internal-review system flagged trades in nonproprietary funds and required brokers to respond to inquiries from the system within 30 days or risk losing compensation.

SYSTEM WITHHELD PAY

Mr. Tchan, who worked in a J.P. Morgan branch in Irvine, Calif., claimed that the system withheld pay even though the trades in outside mutual fund trades were executed and clients were charged sales fees.

J.P. Morgan has been in the spotlight since last July, when The New York Times reported that the firm pushed its brokers to sell internal products, even when outside funds may have been better options.

“Our [client] tells the same story,” said Mr. Tchan's attorney, Philip Aidikoff of the Aidikoff Uhl & Bakhtiari law firm.

Mr. Tchan wanted to diversify stock-heavy clients he inherited and use “other vendors, like [Pacific Investment Management Co. LLC] ... but [J.P. Morgan] verbally discouraged him,” Mr. Aidikoff said.

“They have a supervisory system, which seems to flag the nonproprietary products and requires reps to jump through all sorts of hoops that they wouldn't [by selling] a J.P. Morgan product,” Mr. Aidikoff said.

Mr. Tchan also claimed that the bank brokerage firm used financial planning software to direct clients into proprietary products.

Mr. Tchan claimed that a few weeks after he complained about the supervisory system last fall, his direct supervisor and a compliance official confronted him about switches he made from proprietary stock mutual funds into nonproprietary bond funds.

'HOSTILE WORK ENVIRONMENT'

In his claim, Mr. Tchan said that the trades were done to make his clients' portfolios more consistent with their objectives but that his supervisors didn't believe him and “implied he would be terminated.”

He “had no other option but to leave the hostile work environment ... and resign,” according to his claim.

Mr. Tchan left J.P. Morgan in November and now works for U.S. Bancorp Investments Inc., according to Finra registration records.

J.P. Morgan spokeswoman Lauren Francis declined to comment, citing the pending arbitration.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Carson Group's Schaben: Making sense of millennials

Lazy, entitled, the trophy generation: These are stereotypes most often associated with millennials. But why are these myths and not realities. Carson Group's Aaron Schaben explains.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

Finra ranking brokers in effort to crack down on industry's bad apples

All 634.403 reps have been ranked based on factors such as prior regulatory disclosures, disciplinary actions and employment history.

How to save retirement planning from tax reform

Losing big deductions, even in lieu of a larger standard deduction, may cause taxes to rise in retirement.

Advice firms in a tricky financial position

As revenue growth dips and salaries rise, nearly 90% of firms are at or near capacity.

In a turnaround, Wells Fargo Advisors sees slight bump in headcount

Racked by a scandal in its retail banking unit, Wells still managed to add 37 new advisers in the third quarter, a small number but an improvement nonetheless.

Social Security benefits to increase by 2% in 2018

Largest cost-of-living adjustment since 2012 may be offset for some by higher Medicare premiums.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print