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JPMorgan Chase & Co (NYSE:JPM)’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 the fine, the SEC said.
“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 Democrat-appointed SEC Chair Gary Gensler, who has pledged to crack down on misconduct by Wall Street companies.
The SEC said it discovered 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.
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 conduct a comprehensive review of its policies and procedures relating to the retention of electronic communications found on personal devices, among other remedies.
