A subsidiary of JPMorgan Chase has agreed to pay an $18 million fine to the Securities and Exchange Commission (SEC) for violating whistleblower protection rules. This penalty ranks as one of the largest imposed by the regulator for breaches of this particular rule.
The SEC’s allegations claim that J.P. Morgan Securities prevented hundreds of its advisory clients and brokerage customers from reporting potential violations of securities laws. The firm allegedly required these clients to sign confidential release agreements that included prohibitive language against such reporting.
From March 2020 to July 2023, J.P. Morgan Securities reportedly asked retail clients who received a credit or settlement exceeding $1,000 to sign agreements mandating confidentiality about the settlements and related account information. According to the SEC, at least 362 clients have signed these releases since 2020, receiving amounts ranging from $1,000 to $165,000.
The SEC highlighted that while these confidentiality agreements permitted clients to respond to regulatory inquiries, they did not allow clients to voluntarily contact the SEC or other regulators to report potential misconduct. This practice is a violation of the whistleblowing protection rules established under the 2010 Dodd-Frank Act. These rules prohibit any actions that could impede an individual from directly communicating with SEC staff about possible violations of securities law, including enforcing or threatening to enforce...
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