J.P. Morgan Securities LLC agreed Wednesday to pay $4 million to settle charges by the Securities and Exchange Commission that it misled customers about its brokers’ compensation on the firm’s private website and in marketing materials.
The brokerage firm’s website and marketing materials stated that its advisors were compensated “based on our clients’ performance; no one is paid on commission.”
However, an SEC investigation found that although J.P. Morgan Securities did not pay commissions to registered reps in its U.S. Private Bank, compensation was not based on client performance. Advisors were instead paid a salary and a discretionary bonus based on a number of other factors.
“JPMS misled customers into believing their brokers had skin in the game and were being compensated based on the success of customer portfolios,” said Andrew Ceresney, director of the SEC’s enforcement division. “But none of the factors JPMS used to determine broker compensation was tied to portfolio performance.”
According to the SEC’s order instituting a settled administrative proceeding, J.P. Morgan Securities made the false and misleading statement about broker compensation from 2009 to 2012 to current and prospective customers on JPMS’ private banking website as well as a private banking website for its Tampa regional office.