Finra fines J.P. Morgan $1.1 million for failing to disclose broker misconduct in timely manner

Agency says when the firm did file information, it came on average two years late

Sep 16, 2019 @ 1:48 pm

By Ryan W. Neal

The Financial Industry Regulatory Authority Inc. has fined J.P. Morgan Securities $1.1 million for not reporting internal reviews or allegations of broker misconduct in a timely manner.

From January 2012 to April 2018, Finra found 89 instances where J.P. Morgan Securities either failed to meet Finra's deadline to disclose when a registered representative did things like misappropriate funds, borrow from customers, forge or falsify documents, make unauthorized trades or recommendations, or engage in other suspicious activity. Sometimes J.P. Morgan didn't file a disclosure at all, Finra alleges.

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When J.P. Morgan Securities did file the required information, Finra claims it came, on average, two years late.

Broker-dealers are required to inform Finra within 30 days of terminating a registered rep of any allegations of fraud, wrongful taking of property or violation of industry rules and regulations. By delaying the filing, Finra claims J.P. Morgan Securities prevented the regulation from pursuing disciplinary action against 30 former brokers.

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"Firms must live up to their responsibility as a gatekeeper and disclose allegations in a timely, accurate and complete manner," said Finra executive vice president of enforcement Susan Schroeder in a statement. "This disclosure responsibility is essential to providing transparency and maintaining the integrity of our industry."

Finra alleges J.P. Morgan hadn't established and maintained a writer supervisory procedure or system to identify when it needed to disclose termination notices (Form U5).

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In an emailed statement, J.P. Morgan Securities spokesperson Liz Seymour said the company is "pleased to put this matter behind us," and that the firm has "since made a number of improvements to our controls and procedures to comply with reporting requirements."

In addition to the fine, Finra is requiring the firm to certify within 60 days that it has taken appropriate corrective measures. The regulatory declined to provide additional comment.


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