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J.P. Morgan Misled Clients On Broker Compensation

By Erwin J.Shutak, Esq.  of Shustak Reynolds & Partners, P.C. posted on Monday, January 4, 2016.

J.P. Morgan Securities agreed to pay $4 million to settle charges by the SEC that it mislead clients about how its brokers were compensated, according to the SEC.

The SEC charged J.P. Morgan falsely stated on its private banking website and in marketing materials that its advisors were compensated was “based on our client’s performance; no one is paid on commission”.  The SEC, however, charged that following its investigation, it learned that, in fact, J.P. Morgan did NOT compensate its advisors based on client performance but paid them a salary plus a discretionary bonus based on other factors, including commissions and fees generated from the account activity.

According to the SEC, the firm “misled customers into believing their brokers had skin in the game and were being paid based on performance of the customer portfolios” when, in fact, none of the factors used to determine compensation was actually tied to portfolio performance.  The SEC found the firm made these misleading statements from 2009 to 2012.  

Shustak Reynolds & Partners, P.C. has extensive experience in the area of securities and financial services law and routinely counsels investors, brokers, broker-dealers and registered investment advisors.  For more information, contact Erwin J. Shustak, Esq, Managing Partner, at 619.696.9500 or via email at [email protected] or visit our web site at www.shufirm.com

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