U.S. regulators announced Friday that JPMorgan Chase & Co. must pay more than $200 million in fines to the SEC and CFTC after “widespread” failures to prevent employees from conducting business on personal devices and never preserving those communications.
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The U.S. Securities and Exchange Commission said that the lender will pay a fee of $125 million for “longstanding failures” to preserve staff’s personal communications including text messages, WhatsApp communications and emails that related to its securities business.
The U.S. Commodity Futures Trading Commission will receive an additional $75 million since JPMorgan did not retain its employees’ unauthorized communications, which violated the derivatives regulator’s recordkeeping and supervision requirements.
“The firm’s actions meaningfully impacted the SEC’s ability to investigate potential violations of the federal securities laws,” the SEC 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,” Gurbir S. Grewal, the SEC’s head of enforcement, said in a statement Friday.
This will be one of freshly-appointed SEC Chair Gary Gensler’s first major enforcement actions. Appointed by President Joe Biden, Gensler has pledged to crack down on misconduct by Wall Street and other corporate entities.
The discovery of violations was a result of the brokers inability to produce records during the course of separate investigations. Firms are required to preserve written business communications among employees, and this probe has opened investigations into other recordkeeping practices.
“This is an issue that we’re seeing at other firms,” The SEC noted, adding that “individuals and entities that self-report” will fare better in penalty negotiations.
The SEC stated that J.P. Morgan Securities’ employees often communicated about business matters on personal devices from at least January 2018 through November 2020.
The regulators added that J.P. Morgan Securities agreed to implement a robust overhaul of its policies and procedures as well as retain a compliance consultant going forward as part of the deal.
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