The Financial Industry Regulatory Authority filed an enforcement action against J.P. Morgan Securities, claiming the firm failed to timely disclose 89 allegations of misconduct by its registered reps over a six-year period. The firm has agreed to settle the charges for $1.1 million, neither admitting nor denying them.
“We’re pleased to put this matter behind us,” said Elizabeth Seymour, spokeswoman for J.P. Morgan. “We’ve since made a number of improvements to our controls and procedures to comply with reporting requirements.”
FINRA member firms are required to file termination notices within 30 days of the firing; they’re also required to file allegations involving fraud, wrongful taking of property, or violations of investment-related statutes, regulations, rules or industry standards within 30 days of learning of the misconduct.
“FINRA uses this information to help identify and investigate potential misconduct, and sanction individuals as appropriate,” the regulator said. “Member firms use this information to make informed hiring decisions, and investors use this information—displayed through FINRA's BrokerCheck—when considering whether to do business with a registered or formerly registered person.”
FINRA found 89 instances from January 2012 to April 2018 when the firm failed to timely disclose or disclose at all internal reviews or allegations of misconduct. As a result, the regulator was not able to pursue disciplinary action against 30 former J.P. Morgan brokers, because by the time the conduct was disclosed, FINRA no longer had jurisdiction.
“Firms must live up to their responsibility as a gatekeeper and disclose allegations in a timely, accurate and complete manner,” said Susan Schroeder, executive vice president of FINRA’s department of enforcement. “This disclosure responsibility is essential to providing transparency and maintaining the integrity of our industry."
