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The Wall Street Journal, in its edition of 18-19 December, reports that the Securities and Exchange Commission has fined the brokerage arm of JPMorgan Chase $125 million, the largest fine ever for violating SEC rules requiring brokerages to document communications and make such records available to regulators.
Having access to such records is essential to the SEC’s function of protecting investors and the market’s integrity.
Such communications, involving salespeople, traders and bankers, were once conducted on recorded phone lines or messaging software that was digitally archived, but now take place via cell phones and encrypted apps; where the brokerage went wrong was in not adequately supervising employees and making sure rules were followed.
Monitoring and archiving employees’ communications is the responsibility of management, and became more difficult when, in response to COVID-19, more employees began working from home. But the SEC charged that JPMorgan’s transgressions had predated the COVID War, and amounted to evading the regulators’ ability to conduct investigations.
JPMorgan (in terms of assets, the largest U.S. bank) will also pay $75 million to the Commodity Futures Trading Commission to settle a similar case.
Trends Journal reported, in “THIS BANKSTER AIN’T SINGIN’ THE BLUES” (27 Jul 2021), on how JPMorgan Chase, having admitted to five felony counts brought by the U.S. Justice Dept. since 2014 (related to market manipulations), had paid over $920 million to settle. Nobody went to jail, no other actions were taken, and JPMorgan’s chairman and CEO, Jamie Dimon, and his Board of Directors not only kept their jobs, but Dimon was praised by the bank for his leadership and awarded a $50 million bonus.
But the bank’s recent settlement with the SEC is its first with that agency to involve an admission of wrongdoing; it’s only since October that the SEC has deviated from its “no admit, no deny” policy. The bank also admitted misconduct in its case before the CFTC.
However, an article in Wall Street on Parade, on 20 December, points out that the same type of communications violations by JPMorgan had figured in the earlier Justice Dept. case, and the firm had been on probation and under a Deferred Prosecution Agreement. And then, in September, more charges of market manipulation were brought against the bank by the Justice Dept., and again the result was another Deferred Prosecution Agreement and probation.
The WSoP article alludes to a lawsuit against JPMorgan charging that the bank even falsely reported being in compliance with its agreements with the Justice Dept. This had to do with the bank putting the children of Chinese officials on its payroll in order to further its business interests in China.
The WSoP article goes into some detail (as is characteristic of that publication) in describing how JPMorgan allegedly used complex, convoluted, confusing and outright false record-keeping to obfuscate and conceal its alleged improprieties; the lawsuit essentially alleges that JPMorgan kept, for fraudulent purposes, two sets of books.
And the SEC is depending on JPMorgan’s Board of Directors to oversee a “Compliance Consultant.” Wall Street on Parade describes this mess as “this serial crime wave at the largest federally-insured bank in the United States,” and calls for a Senate investigation.
TRENDPOST: Wall Street on Parade also mentions yet another scandal involving JPMorgan Chase: the “London Whale” affair; see “CRIMINALITY IN HIGH FINANCE: THE BEAT GOES ON” (9 Nov 2021).
What more can we possibly say? Any allusions to “the foxes guarding (or even running) the chicken coop” seem woefully inadequate to describe the doings of the members of this big ol’ self-protecting, self-perpetuating, congenitally corrupt club; see “DON’T CALL THEM ‘CRIMINALS’ — THEY’RE ‘WHITE SHOE BOYS’!” (29 Sep 2021).