FINRA imposes $1.1m fine on J.P. Morgan Securities over disclosure failures
The company has failed to timely disclose 89 internal reviews or allegations of misconduct by its registered representatives and associated persons over a six-year period.
The United States Financial Industry Regulatory Authority (FINRA) has announced it has imposed a $1.1 million fine on J.P. Morgan Securities LLC (JPMS) over the company’s failure to timely disclose 89 internal reviews or allegations of misconduct by its registered representatives and associated persons over a six-year period. FINRA also required an undertaking by the firm to certify within 60 days that it has taken appropriate corrective measures.
The Authority explains that broker-dealers are required to file with it a Uniform Termination Notice for Securities Industry Registration (Form U5) within 30 days of terminating a registered representative’s association and to file an amendment with FINRA within 30 days of learning that anything previously disclosed on the Form U5 is inaccurate or incomplete. Firms have to disclose, inter alia, allegations involving fraud, wrongful taking of property, or violations of investment-related statutes, regulations, rules or industry standards of conduct.
FINRA found that from January 2012 to April 2018, JPMS failed to disclose, or timely disclose, 89 internal reviews or allegations of misconduct by its registered representatives and associated persons, including misappropriation of customer and company funds, borrowing from customers, forgery or falsification or alteration of documents, unauthorized trading, making unsuitable recommendations, structuring and other suspicious activity.
Although JPMS eventually filed the required information with FINRA, it was, on average, more than two years late. This prevented or delayed FINRA, other regulators, member firms, and the public from learning about the allegations. JPMS’ delays prevented FINRA from pursuing potential disciplinary action against 30 former JPMS representatives over whom FINRA’s jurisdiction expired before JPMS disclosed the allegations.
These failures, according to FINRA, resulted mainly from the firm’s failure to establish and maintain reasonably designed written supervisory procedures and supervisory systems to identify all instances when Form U5 disclosures were necessary.
In settling this matter, JPMS neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
