The Securities and Exchange Commission (SEC) has fined JPMorgan $125m due to ‘widespread and longstanding failures’ by the bank to maintain and preserve written communications.
The SEC detailed JPMS admitted that from at least January 2018 to November 2020, its employees communicated often about securities business matters on their personal devices, using WhatsApp, text messages and personal email accounts. None of these records were preserved by the bank as required by the federal securities laws.
In addition, JPMS admitted these failures were company-wide and that practices were not hidden within the business.
The bank received both subpoenas for documents and voluntary requests from SEC staff in numerous investigations during the stated time period that the company failed to maintain required records. In response to these subpoenas and requests, JPMS regularly did not search for relevant records contained on the personal devices of its employees.
JPMS admitted that its recordkeeping deficiencies deprived the SEC staff of timely access to evidence and potential sources of information for extended periods of time, and in some cases, permanently. Subsequently, these actions impacted the SEC’s ability to investigate possible violations of the federal securities laws.
JPMS admitted the facts set forth in the SEC’s order and acknowledged that its conduct violated the federal securities laws. The bank agreed to pay the penalty and introduce ‘robust’ improvements to its compliance policies and procedures to settle the matter.
SEC chair Gary Gensler said, “Since the 1930s, recordkeeping and books-and-records obligations have been an essential part of market integrity and a foundational component of the SEC’s ability to be an effective cop on the beat. As technology changes, it’s even more important that registrants ensure that their communications are appropriately recorded and are not conducted outside of official channels in order to avoid market oversight.
“Unfortunately, in the past we’ve seen violations in the financial markets that were committed using unofficial communications channels, such as the foreign exchange scandal of 2013. Books-and-records obligations help the SEC conduct its important examinations and enforcement work. They build trust in our system. Ultimately, everybody should play by the same rules, and today’s charges signal that we will continue to hold market participants accountable for violating our time-tested recordkeeping requirements.”
SEC division of enforcement director Gurbir Grewal said, “Recordkeeping requirements are core to the Commission’s enforcement and examination programs and when firms fail to comply with them, as JPMorgan did, they directly undermine our ability to protect investors and preserve market integrity. We encourage registrants to not only scrutinize their document preservation processes and self-report failures such as those outlined in today’s action before we identify them, but to also consider the types of policies and procedures JPMorgan implemented to redress its failures in this case.”
JPMorgan is the third big bank in the last month to be hit with a stinging fine. Last week, the Financial Conduct Authority fined HSBC Bank £63.9m for failings related to its anti-money laundering processes. Natwest was also recently given a whopping £264m fine for three accounts of money laundering failures.
Copyright © 2021 RegTech Analyst
Copyright © 2018 RegTech Analyst
