SEC: JPMorgan Chase To Pay $267 Mln For Disclosure Failures

(RTTNews) - The U.S. Securities and Exchange Commission announced that two wealth management subsidiaries of JPMorgan Chase & Co. (JPM) have agreed to pay $267 million and admit wrongdoing to settle charges that they failed to disclose conflicts of interest to clients.

JPMorgan Chase Bank also agreed to pay an additional $40 million penalty to the U.S. Commodity Futures Trading Commission or CFTC.

An SEC investigation found that J.P. Morgan Securities LLC and JPMorgan Chase Bank N.A. preferred to invest clients in the firm's own proprietary investment products without properly disclosing this preference.

According to the SEC, this preference impacted two fundamental aspects of money management - asset allocation and the selection of fund managers - and deprived JPMorgan's clients of information they needed to make fully informed investment decisions.

The subsidiaries agreed to jointly pay $127.5 million in disgorgement, $11.815 million in prejudgment interest, and a $127.5 million penalty. JPMS agreed to be censured, and both subsidiaries agreed to cease and desist from further violations.

Andrew J. Ceresney, Director of the SEC Enforcement Division, stated, "These J.P. Morgan subsidiaries failed to disclose that they preferred to invest client money in firm-managed mutual funds and hedge funds, and clients were denied all the facts to determine why investment decisions were being made by their investment advisers."

JPM closed Friday's regular trading session down at $64.40.