JPMorgan Hit With a $200M Fine for Allowing Employees to Do This

The Securities and Exchange Commission (SEC) announced on Friday that JPMorgan admitted to bookkeeping failures and has agreed to pay a $125 million fine to settle the charges.

The bank was also fined $75 million by the Commodity Futures Trading Commission as well for allowing unapproved communications since at least 2015.

According to the SEC, JPMorgan acknowledged that, from at least January 2018 to November 2020, its employees used personal devices to send texts, WhatsApp messages and emails about company business. Messages included content on a wide range of discussions, including investment strategies, client meetings and market observations, the SEC officials said.

The SEC added that even the managers and senior personnel responsible for compliance used their personal devices to communicate sensitive business matters.

SEC officials spoke to reporters on Thursday evening andn said JPMorgan’s failure to preserve those offline conversations violated federal securities law and left the regulator blind to exchanges between the bank and its clients.

It is difficult for bank compliance departments to surveil communications on third-party apps.

Traders at JPMorgan, Morgan Stanley, Deutsche Bank and other firms have been dismissed or placed on leave for infractions tied to the practice.

The investigation at JPMorgan is ongoing.

JPMorgan declined to comment beyond a regulatory disclosure that acknowledged settlements with the two agencies.

The company also agreed to hire a compliance consultant to review the bank’s policies and training, the SEC said. The bank had already begun upgrades to employees’ software to improve compliance, the SEC added.

“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,” SEC Chair Gary Gensler stated.

“Books-and-records obligations help the SEC conduct its important examinations and enforcement work,” Gensler added. “They build trust in our system.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.