US-based financial services company JPMorgan Chase & Co. is set to pay $151m to settle five cases on its affiliates by the US Securities and Exchange Commission (SEC).
SEC has charged JP Morgan’s affiliates, JP Morgan Securities (JPMS) and JP Morgan Investment Management (JPMIM), in five separate enforcement actions.
The US regulator accused the two of misleading investors, violating fiduciary duty, facilitating illegal joint transactions and principal trades, and providing advice not in the customers’ interest.
JPMS and JPMIM have agreed to pay more than $151m in civil penalties and voluntary payments to investors to resolve four of the enforcement actions.
The settlement includes a $61m civil fine and $90m in reimbursements to the customers.
SEC excluded JPMS from one of the cases, as the firm cooperated with the regulator in the investigation and started remedial measures.
SEC enforcement division acting director Sanjay Wadhwa said: “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.
“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.”
According to the SEC, JPMS provided misleading information to brokerage customers who invested in its Conduit private funds products.
Between 2017 and 2024, JPMS failed to disclose the financial incentive when its advisors recommended its own portfolio management programme over third-party advisory programmes.
Also, JPMS recommended its retail brokerage customers certain mutual fund products, dubbed Clone Mutual Funds, when less expensive products with the same portfolios were available.
The regulator did not impose a civil penalty because JPMS self-reported the issue to the SEC, conducted an internal investigation, and cooperated with the investigation.
JPMIM facilitated $4.3bn in illegal joint transactions, which advantaged an affiliated foreign money market fund as a portfolio manager over three US money market mutual funds.
Between July 2019 and March 2021, JPMIM was engaged in 65 principal trades, which are generally prohibited to avoid undisclosed conflicts of interest, valuing around $8.2bn.
