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January 15, 2020 at 02:12 PM
The Securities and Exchange Commission ordered J.P. Morgan Securities to pay a $1.5 million civil money penalty for failing to provide certain retail retirement account and charitable organization brokerage customers with sales charge waivers and lower fee share classes.
In a Jan. 9 administrative proceeding, the agency also ordered the unit to pay $251,083 in disgorgement as well as prejudgment interest of $71,355.
From at least January 2010 through December 2015, JPMS “disadvantaged certain retirement plan and charitable organization brokerage customers who maintained accounts at JPMS by failing to ascertain that they were eligible for a less expensive share class, and recommending and selling them more expensive share classes in certain open-end registered investment companies when less expensive share classes were available,” the SEC order states.
JPMS did so without disclosing that it would receive greater compensation from the eligible customers’ purchases of the more expensive share classes, according to the order.
Also, eligible customers did not have sufficient information to understand that JPMS had a conflict of interest resulting from compensation it received for selling the more expensive share classes.
