A former brokerage client has sued JPMorgan Chase & Co. for allegedly steering him and other investors to overpriced, underperforming funds to boost the bank’s fees and profits. According to the complaint, JPMorgan falsely represented its financial advisers were operating under fiduciary duty to clients, while its bonuses encouraged the sale of proprietary funds. The complaint seeks class action status.
The lawsuit, filed in New York State Supreme Court in Manhattan, follows a report about JPMorgan’s practices published on July 2 by the New York Times.
According to the lawsuit, JPMorgan’s marketing materials highlighted “inflated, hypothetical returns,” while suppressing a “much less rosy” picture of performance.
According to the complaint, JPMorgan, the largest U.S. bank, turned to proprietary funds and investments to make up for declining profits after the housing boom burst. The strategy allowed JPMorgan to collect double fees for management and sales, it said.
The complaint also alleges that the U.S. Securities and Exchange Commission, Financial Industry Regulatory Authority and Manhattan District Attorney are among those investigating JPMorgan’s sales practices.
The case is Alan H. Tralins v. JPMorgan Chase & Co., New York State Supreme Court, No. 652448/2012, New York County.
