JPMorgan to pay more than $300M in settlement over wealth management conflicts

Allegations include that the bank didn't disclose its preference for putting clients' money into its own investment products

Dec 18, 2015 @ 12:11 pm

By Bloomberg News

JPMorgan Chase & Co. will pay more than $300 million to settle U.S. allegations that it didn't disclose its preference for putting clients' money into the bank's own investment products.

America's largest bank by assets admitted that two of its wealth-management subsidiaries — its securities subsidiary and its nationally chartered bank — failed to tell customers it preferred JPMorgan-managed mutual funds and hedge funds from 2008 to 2013, according to the Securities and Exchange Commission.

The SEC announced $267 million in penalties and disgorgements against JPMorgan. The bank agreed to pay an additional $40 million as part of a parallel action by the U.S. Commodity Futures Trading Commission.

(Related: 10 other huge regulatory fines in the advice industry)

“Firms have an obligation to communicate all conflicts so a client can fairly judge the investment advice they are receiving,” Andrew J. Ceresney, director of the SEC Enforcement Division, said in a statement. “These J.P. Morgan subsidiaries failed to disclose that they preferred to invest client money in firm-managed mutual funds and hedge funds, and clients were denied all the facts to determine why investment decisions were being made by their investment advisers.”

The disclosure weaknesses cited in the settlements “were not intentional and we regret them,” said Darin Oduyoye, a JPMorgan spokesman. “We have always strived for full transparency in client communications, and in the last two years have further enhanced our disclosures in support of that goal.”

(Ex-SEC inspector general David Kotz on advice industry regulation's future)


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