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JP Morgan Agrees to Pay $300+ Million to Settle SEC Charges

By Erwin J.Shutak, Esq.  of Shustak Reynolds & Partners, P.C. posted on Monday, December 21, 2015.

JP Morgan announced that it will pay over $300 million to settle SEC charges that it failed to disclose to its clients that it had a pattern and preference for encouraging its clients to invest in JP Morgan’s own investment products. JP Morgan is the largest bank in the U.S. measured by asset size.

According to the SEC, two of JP Morgan’s wealth advisor subsidiaries and its nationally chartered bank failed to disclose to clients that it preferred to have them invest in JP Morgan-sponsored hedge and mutual funds between 2008 and 2013. In other words, JP Morgan never disclosed to clients, as it was steering them into its own funds which would yield much more in fees and commissions, that it had an inherent conflict of interest. The settlement involved almost $270 million in penalties and disgorgement to the SEC and almost $40 million to settle a companion action by the U.S. Commodity Futures Trading Commission.

“Firms have an obligation to communicate all conflicts so a client can fairly judge the investment advice they are receiving,” Andrew J. Ceresney, director of the SEC Enforcement Division, said in a statement. “These J.P. Morgan subsidiaries failed to disclose that they preferred to invest client money in firm-managed mutual funds and hedge funds, and clients were denied all the facts to determine why investment decisions were being made by their investment advisers.”

Shustak Reynolds & Partners, P.C. has handled many cases for investors whose brokerage firms and banks have breached their fiduciary duties owed to the investors.  We are happy to speak with any affected JP Morgan clients. Shustak Reynolds & Partners, P.C. has extensive expertise and experience in the areas of securities, financial services and business law. For more information  contact Erwin J. Shustak, Esq, t 619.696.9500 or via email at  [email protected]. 

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