The Securities and Exchanges Commission (SEC) has fined J.P. Morgan Securities LLC (JPMS), a broker-dealer subsidiary of JPMorgan Chase & Co, $125 million for not keeping records of traders’ chats.
JPMS admitted that from at least January 2018 through November 2020, its employees often communicated about securities business matters on their personal devices, using text messages, WhatsApp, and personal email accounts. None of these records were preserved by the firm as required by the federal securities laws, SEC says.
The European Commission recently fined UBS, Barclays, RBS, HSBC and Credit Suisse €344 million for participating in a Foreign Exchange “spot trading cartel” through a private chatroom.
SEC is not suggesting any manipulation occurred or other wrongdoing, but Sanjay Wadhwa, Deputy Director of Enforcement, said:
“JPMorgan’s failures hindered several Commission investigations and required the staff to take additional steps that should not have been necessary.”
The fine amounts to 0.25% of JP Morgan’s yearly profits, and to about 1% of their quarterly profits, with SEC Chair Gary Gensler stating:
“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.”
