JPMorgan Chase, the largest bank in the United States, has agreed to pay $151 million to resolve five enforcement cases with the U.S. Securities and Exchange Commission (SEC). The SEC’s accusations against JPMorgan involve making misleading disclosures to its brokerage clients and other violations of investor protection regulations, as announced by the agency on Thursday.
Under the terms of the settlement, JPMorgan will pay $61 million in civil penalties and reimburse $90 million directly to impacted customers. Although the bank did not admit to or deny the allegations, it has committed to the settlement terms. The SEC asserts that JPMorgan’s practices, spanning multiple divisions, compromised investor protections designed to guard against self-dealing and conflicts of interest.
In the largest of the settlements, JPMorgan will provide $90 million in reimbursements and pay a $10 million fine related to “conduit” products. These products pooled client funds for investments in private equity and hedge funds that would later issue shares in companies going public. According to the SEC, JPMorgan failed to inform customers that it retained complete discretion over the timing and amount of share sales, often leading to delays that could expose investors to market risks, especially during price declines.
Another significant penalty within the settlement includes a $45 million fine imposed on JPMorgan for not fully disclosing potential financial benefits to the bank and its brokers when they promoted proprietary investments over similar third-party options. This lack of transparency occurred between July 2017 and October 2024, impacting brokerage clients who may have assumed the recommendations were solely in their best interest.
Additionally, the SEC highlighted that JPMorgan recommended certain mutual funds to more than 10,500 retail clients despite having access to less expensive, virtually identical exchange-traded funds (ETFs). JPMorgan voluntarily compensated these clients with $15.2 million after acknowledging the issue, and in response to their proactive remedy, the SEC opted not to impose an additional fine for this violation.
In response to the settlement, JPMorgan expressed satisfaction in reaching a resolution and reaffirmed its dedication to “upholding the highest standards in client service.” The bank stated that it promptly addresses any issues that arise to ensure continued trust and compliance.
These settlements are part of a broader trend where regulators are scrutinizing the transparency of financial institutions’ disclosures to ensure that client interests remain paramount. As regulatory pressure grows, major institutions like JPMorgan are working to reinforce their commitment to ethical practices in handling client investments.
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