The Securities and Exchange Commission recently announced that J.P. Morgan’s brokerage business agreed to pay $4 million to settle charges that it falsely stated on its private banking website and in marketing materials that advisors are compensated “based on our clients’ performance; no one is paid on commission.”
An SEC investigation found that although J.P. Morgan Securities LLC (JPMS) did not pay commissions to registered representatives 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.
According to the SEC’s order instituting a settled administrative proceeding:
- JPMS made the false and misleading statement about broker compensation from 2009 to 2012.
- JPMS employees identified the broker compensation statement as inaccurate on four occasions from March 2009 to February 2011. But JPMS failed to correct the misstatement on each of those occasions.
- It wasn’t until May 2012 – more than three years after it was first made – that the misstatement was corrected by JPMS in some marketing materials.
- The misstatement was made to current and prospective customers on JPMS’ private banking website as well as a private banking website for its Tampa regional office.
- Among the marketing materials that included the misstatement were a prospecting card, a pitch book, and a marketing letter.
Without admitting or denying the findings, JPMS consented to the entry of the SEC’s order finding violations of Section 17(a)(2) of the Securities Act of 1933. In addition to the $4 million penalty, JPMS agreed to be censured and must cease and desist from committing or causing any violations and any such future violations.
Transparency is a key focus of regulators in the brokerage industry. It is important that clients be able to trust the representations of their brokerage firm.
The foregoing information, which is publicly available on the SEC’s website, is being provided by The White Law Group.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. The firm represents investors in claims against their brokerage firm throughout the country.
For more information on the firm and its securities arbitration practice, visit https://www.whitesecuritieslaw.com. For a free consultation with a securities attorney, please call the firm’s Chicago office at 312/238-9650.