JPMorgan’s Recordkeeping and Supervisory Failures Violate Securities Laws, Lead to $125 Million Penalty

exclamation point on an orange circleJPMorgan Chase & Co.’s broker-dealer subsidiary, J.P. Morgan Securities LLC (JPMS), agreed to pay a $125 million penalty and acknowledged that it failed to preserve written communications as required by federal securities laws. The Securities and Exchange Commission’s (SEC) press release announcing the charges and penalty is available here | JPMorgan Admits to Widespread Recordkeeping Failures and Agrees to Pay $125 Million Penalty to Resolve SEC Charges

According to the SEC, from January 2018 through November 2020, JPMS admitted that its employees communicated about securities-related matters on personal devices using texts, WhatsApp, and personal email accounts. The federal securities laws, including Section 17(a) of the Exchange Act and Rules 17a-4(b)(4) and 17a-4(j), require broker-dealers to preserve these records.  JPMS did not. 

JPMS’ failure to adhere to recordkeeping requirements was widespread and not hidden. The SEC’s order explains, “To the contrary, supervisors – i.e., the very people responsible for supervising employees to prevent this misconduct – routinely communicated using their personal devices. In fact, dozens of managing directors across the firm and senior supervisors responsible for implementing JPMorgan’s policies and procedures, and for overseeing employees’ compliance with those policies and procedures, themselves failed to comply with firm policies by communicating using non-firm approved methods on their personal devices about the firm’s securities business.”  JPMS’ failure to reasonably supervise employees violated Section 15(b)(4)(E) of the Exchange Act.

Perhaps not surprising to lawyers who represent investors in cases against broker-dealers and others in the financial industry, the SEC’s order goes on to explain that in responding to “documents and records requests in numerous Commission investigations…JPMorgan frequently did not search for records” on employees’ personal devices.

This blog is intended to provide information to the general public and to practitioners about developments that may impact Oregon Investments.

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Cody Berne

Cody Berne is an attorney at Stoll Berne in Portland. Cody’s practice focuses on representing investors who lost money because of fraud and other misconduct, class actions, and business litigation. He is a member of the Public Investors Advocate Bar Association and the Oregon Trial Lawyers Association.


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The information contained in this blog does not constitute legal advice, and does not create an attorney-client relationship. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this blog.