What You Need to Know
- Tens of thousands of messages escaped surveillance, hindering regulatory investigations, the SEC says.
- JPMorgan was forced to admit wrongdoing.
- The probe into record-keeping violations continues and will look at other firms, officials say.
JPMorgan Chase & Co. executives were supposed to make sure employee communications were archived for regulatory scrutiny. But for years, even the bosses were using their mobile phones to tap out work-related messages — a practice so pervasive that U.S. authorities dropped the hammer Friday, imposing $200 million in fines.
The revelation that even “managing directors and other senior supervisors” had shrugged off surveillance duties by using platforms such as WhatsApp or personal email addresses helped prompt the Securities and Exchange Commission and Commodity Futures Trading Commission to impose unusually stiff penalties on the firm and its subsidiaries for record-keeping violations.
Both agencies even extracted rare admissions from the largest U.S. bank that it broke rules — rather than letting the company settle without acknowledging wrongdoing. JPMorgan will pay a $125 million penalty to resolve the SEC’s case, while the CFTC fine is $75 million.
“JPMorgan’s failures hindered several commission investigations and required the staff to take additional steps that should not have been necessary,” Sanjay Wadhwa, the SEC’s deputy director of enforcement, said in a statement. “This settlement reflects the seriousness of these violations. Firms must share the mission of investor protection rather than inhibit it.”
JPMorgan acknowledged the settlement in a filing Friday and declined to comment further.
The parallel investigations sent shivers through JPMorgan’s workforce this year, when the company ordered traders, bankers, financial advisers and even some branch employees to preserve messages on personal devices in case they need to be inspected later. Regulators hope the fines will now send a message industrywide, where use of platforms such as WhatsApp has become common in recent years — especially during a pandemic that’s sent legions of Wall Streeters home.
The SEC’s punishment for JPMorgan dwarfs the $15 million penalty the agency imposed on Morgan Stanley in 2006 during a prior look at industry record keeping.