JPMorgan Chase Settles SEC Cases

By Jonathan Stempel

NEW YORK (Reuters) – JPMorgan Chase will pay $151 million to settle five U.S. Securities and Exchange Commission (SEC) enforcement cases, including accusations of misleading disclosures to brokerage customers, as announced on Thursday.

The settlements consist of $61 million in civil fines and $90 million in reimbursements to customers. JPMorgan did not admit or deny wrongdoing in its agreement to the settlements.

Sanjay Wadhwa, acting director of the SEC enforcement division, stated, "JPMorgan's conduct across multiple business lines violated various laws designed to protect investors from the risks of self-dealing and conflicts of interest."

In the largest settlement, JPMorgan will pay a $10 million civil fine and reimburse $90 million to customers who invested in "conduit" products. These products pooled customer money to invest in private equity or hedge funds that later distributed shares of companies that went public.

The SEC indicated that JPMorgan failed to disclose its complete discretion over when and how many shares to sell, exposing customers to market risk, especially when prices dropped, as it sometimes took months to sell shares.

Additionally, JPMorgan was fined $45 million for not fully disclosing from July 2017 to October 2024 how the bank and its brokers could financially benefit by recommending in-house investments over similar third-party products.

In a statement, the New York-based bank expressed satisfaction with the settlement, stating it addresses issues as they arise and "strives to uphold the highest standards in client service."

The SEC also alleged that JPMorgan recommended certain mutual funds to 10,500 retail brokerage customers when less expensive but identical exchange-traded fund (ETF) products were available. JPMorgan voluntarily repaid those customers $15.2 million and was not fined for reporting the issue.