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J.P. Morgan Remains Under Investigation in Records-Keeping Scandal Despite Paying $200 Million Fine
Bank is now under investigation by unnamed authorities despite settling with the SEC and CFTC.
February 23, 2022
The nine-figure check J.P. Morgan (JPM) recently wrote to settle a records-keeping scandal may not bring about the closure the firm had hoped. Despite settling with multiple regulators, J.P. Morgan is still fielding requests for information from yet unnamed authorities related to its non-compliance with records preservation rules.
In December 2021, J.P. Morgan was fined $200 million for allowing employees to communicate about financial transactions via personal email and messaging applications, in part, to avoid preserving records that may be requested by regulators. In violating records preservation rules firm-wide, J.P. Morgan paid a $125 million civil fine to the SEC and $75 million to the CFTC.
The bank’s actions, according to the SEC, impeded federal investigations:
“...the firm’s actions meaningfully impacted the SEC’s ability to investigate potential violations of the federal securities laws.”
The J.P. Morgan inquiry prompted similar investigations at other financial firms. But J.P. Morgan’s trouble with records preservation may not be over as the penalty might infer. In its latest 10-K, J.P. Morgan revealed new inquiries:
“The Firm continues to respond to requests for information and other material from certain authorities concerning its compliance with records preservation requirements in connection with business communications sent over electronic messaging channels that have not been approved by the Firm. The Firm is cooperating with these inquiries.”
The disclosure is made on page 291 of the 312 page filing.
J.P. Morgan’s use of the word “authorities” is new and potentially significant. In its last quarterly filing prior to the annual report— and SEC and CFTC settlements— J.P. Morgan characterized inquiries on the matter as being from regulators. The new language in the annual report suggests the bank is being scrutinized by entities other than regulators.
DuDil has contacted J.P. Morgan to learn if the authorities referenced in the annual report include the Department of Justice (DOJ) or other law enforcement agencies. We’ll update you if and when we develop new information.
Related: GS, WFC, C, BAC
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