JPMorgan Chase has agreed to pay $151 million to resolve five enforcement actions by the U.S. Securities and Exchange Commission (SEC), sidestepping any admission of guilt. The financial giant, under scrutiny for allegedly misinforming brokerage customers and prioritizing its interests, will pay $61 million in civil fines and return $90 million to impacted clients.
Central to the settlement is a $10 million fine paired with $90 million in reimbursements related to “conduit” investment products. These offerings pooled funds for private equity or hedge fund investments, with the goal of later distributing shares from public listings. The SEC found that JPMorgan withheld key details, like having full control over the timing and volume of share sales, leaving customers vulnerable to market fluctuations, especially when delays caused share prices to dip.
Another significant penalty, amounting to $45 million, arose from the bank’s lack of transparency. From 2017 to 2024, JPMorgan allegedly downplayed the potential financial gains for itself and its brokers when recommending proprietary investments over similar, third-party-managed options.
The SEC also flagged JPMorgan for suggesting mutual funds to over 10,000 brokerage clients, even when less expensive, identical exchange-traded funds (ETFs) were available. After reporting this misstep, the bank voluntarily reimbursed $15.2 million to the affected clients and avoided additional penalties.
Despite the hefty payouts, JPMorgan emphasized its commitment to correcting errors and upholding top-tier client service. The case underscores ongoing regulatory scrutiny as financial institutions navigate complex disclosures and investment recommendations.
