SEC issues $125M fine to JPMorgan

The Securities and Exchange Commission (SEC) announced a $125 million fine on Friday against J.P. Morgan Securities, part of banking and investment company JPMorgan Chase, because it said employees had evaded reporting requirements by using WhatsApp and other messaging services.

The SEC in a press release faulted the security firm for “widespread and longstanding failures” from at least January 2018 to November 2020.

It said employees of the firm, including supervisors and managers, used WhatsApp, private email accounts and personal phones to discuss investments and business that should otherwise be logged and reported as part of the Securities Exchange Act of 1934.

J.P. Morgan Securities is a leading investment management company and as such is required to report investment and business-related communications so the SEC can ensure compliance and maintain a fair market.

The SEC said it had deprived SEC staff of “sources of information for extended periods of time and in some instances permanently.”

JPMorgan Chase admitted wrongdoing and agreed to the settlement, according to the SEC. 

SEC Chairman Gary Gensler said companies need to report and keep track of written communications for the SEC to do its job and that “everybody should play by the rules.”

“Since the 1930s, recordkeeping and books-and-records obligations have been an essential part of market integrity and a foundational component of the SEC’s ability to be an effective cop on the beat,” he said in a statement. “As technology changes, it’s even more important that registrants ensure that their communications are appropriately recorded and are not conducted outside of official channels in order to avoid market oversight.”

JPMorgan Chase also agreed to undergo a comprehensive review of its policies. The Hill has reached out to the company for comment.

The SEC is also investigating record-keeping transactions at other financial firms as a result of the findings in this investigation.

“This settlement reflects the seriousness of these violations. Firms must share the mission of investor protection rather than inhibit it with incomplete recordkeeping,” said Sanjay Wadhwa, the deputy director of enforcement at the SEC.