Securities and Exchange Commission announced Wednesday that JPMorgan Chase & Co. (NYSE: JPM) agreed to pay $4 million for misled customers about its brokers’ compensation.
The SEC found that J.P. Morgan Securities falsely stated on its private banking website and in marketing materials that advisers are compensated “based on our clients’ performance, and no one is paid on commission.” The result of investigation show that advisers were compensated not based on client performance, but paid a salary and a bonus.
“There was no allegation that the mistake made years ago was intentional or that any client was harmed,” a representative for the bank said. “We have further enhanced our procedures and processes to prevent a reoccurrence.”
Securities and Exchange Commission said that employees pointed out the false statements on four occasions between 2009 and 2011, but JPMorgan failed to correct the problem. For example, a private bank employee wrote an email in 2009 to a marketing manager, "Why not be blunt and say 'paid on salary and bonus,' technically, I do not see any compensation based on the client's performance.” The other employees also sent similar emails to the marketing manager. Until 2012, JPMorgan started correct the statement in some of its marketing materials.
J.P. Morgan Securities agreed to be censured and cease and desist from future similar violations. The bank didn’t admit or deny the result of investigation.