The Securities and Exchange Commission and the Commodity Futures Trading Commission have fined JPMorgan Chase $200 million for failing to maintain track of its employees’ personal interactions concerning work problems.
According to the SEC, JPMorgan employees, including managing directors and other senior supervisors, allegedly exchanged thousands of messages about securities matters via text, WhatsApp, and personal email accounts from at least January 2018 to November 2020, including investment strategy, discussions of client meetings, and communications about market colour, analysis, activity trends, or events.
The agency stated that the investment bank failed to keep a record of the interactions, as required by federal securities laws, and that JPMorgan confessed its failings were widespread and that its practices were not disguised.
“During the time that it failed to preserve necessary securities records pertaining to the company, JPMorgan received and responded to commission subpoenas for documents and records requests in many commission investigations,” the SEC’s ruling stated. “When responding to these subpoenas and requests, JPMorgan typically did not look for documents pertinent to those investigations on the personal devices of JPMorgan employees.”
“The commission’s ability to carry out its regulatory tasks and investigate potential breaches of federal securities laws was harmed by JPMorgan’s record-keeping failings across these investigations.”
As a consequence of the SEC’s accusations, JPMorgan will pay $125 million and engage a compliance expert to evaluate its rules and processes for employee communications and provide recommendations for changes. It will also pay the CFTC $75 million to resolve allegations stemming from a separate investigation into the subject.
The investment bank improved its rules and processes and strengthened training pertaining to the use of allowed communications channels, including personal devices, prior to the SEC and CFTC’s proceedings. It also changed the technologies available to employees significantly. A spokeswoman for JPMorgan declined to comment.
The SEC stated that it is conducting other investigations into other financial organisations’ record-keeping procedures.