J.P. Morgan Securities to Pay $200 Million for Recordkeeping Lapses

J.P. Morgan Securities to Pay 0 Million for Recordkeeping Lapses

LONDON (Agencies): U.S. regulators fined J.P. Morgan Securities $200 million for “widespread” failures to preserve staff communications on personal mobile devices, messaging apps and emails, and are probing similar lapses at other financial institutions, they said on Friday.
JPMorgan Chase & Co.’s broker/dealer subsidiary admitted to the charges and to violating securities laws. It also agreed to implement robust improvements to compliance policies, in addition to a fine, the U.S. Securities and Exchange Commission (SEC) said in its $125 million order.
The U.S. Commodity Futures Trading Commission (CFTC) also announced Friday it had fined the firm $75 million for the same issues.
Impeding Regulators’ Duty
“The firm’s actions meaningfully impacted the SEC’s ability to investigate potential violations of the federal securities laws,” the SEC said.
The penalty is one of the first major enforcement actions brought under SEC Chair Gary Gensler, who was appointed by Democratic President Joe Biden and who has pledged to crack down on misconduct by Wall Street companies.
The SEC said it discovered that J.P. Morgan Securities had been violating rules that require firms to preserve written business communications when the broker was unable to produce records during the course of other investigations.
As a result of the JPMorgan probe, the SEC has opened investigations into other firms’ records-keeping practices, it said, confirming an October Reuters report.
“This is an issue that we’re seeing at other firms,” said an SEC official, adding that “individuals and entities that self-report” will fare better in penalty negotiations.
From at least January 2018 through November 2020, J.P. Morgan Securities’ employees often communicated about securities business matters on their personal devices, using text messages, WhatsApp, and personal email accounts, the SEC said.
Senior Management Knew
None of these records were preserved. The lapses were institution-wide and known to senior management, who also used personal devices to discuss business matters, the SEC said.
It added that J.P. Morgan Securities agreed to retain a compliance consultant and to conduct a comprehensive review of its policies and procedures relating to the retention of electronic communications found on personal devices, among other remedies.

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