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Rating:For $150MM, JPMAM May Soon Put That SEC Investigation to Rest Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, August 19, 2015

For $150MM, JPMAM May Soon Put That SEC Investigation to Rest

News summary by MFWire's editors

Word is that J.P. Morgan [profile] is close to a more than $150-million settlement with the SEC over its private bank's proprietary investment product sales.

Jean Eaglesham and Emily Glazer of the Wall Street Journal report that, per unnamed sources, the regulatory agency is mere weeks away from announcing the settlement. Per page 169 of J.P. Morgan's most recent 10-Q quarterly report, the SEC's main concerns are "disclosures concerning the use of hedge funds that pay placement agent fees to J.P. Morgan Chase broker-dealer affiliates" as well as "client disclosure concerning conflicts associated with the Firm's sale and use of proprietary products, such as J.P. Morgan mutual funds, in the Firm's wealth management businesses."

The article notes that Indiana's own securities division is also looking into J.P. Morgan over what sounds like similar concerns.

This spring, the SEC reportedly beefed up its two-year investigation into J.P. Morgan Asset Management's "guided architecture" practices. The OCC, which regulates banks, is reportedly also involved in the investigation.

Later this spring, the bank revealed that the SEC sent JPMAM subpoenas. Separately, last month JPMAM was named as one of more than 12 fund shops examined in the SEC's "distribution in guise" sweep over sub-TAs and other similar fees. There's no word yet on whether JPMAM is one of the examination targets that have been referred to the enforcement division.

Meanwhile, JPMAM and other units at the bank are facing job cuts, 5,000 in total across the whole organization (no word on how much will come from JPMAM). JPMAM continues to rake in big inflows, even proportionately. George Gatch, CEO of global funds management and chairman of the ICI GMM planning committee, continues to stand by active management and focus on the industry's future. 

Correction: A prior version of this story mistakenly claimed that a recent J.P. Morgan filing pointed to hedge funds as being the main focus of the SEC investigation. That same filing also highlights disclosures related to the "sale and use of proprietary products, such as J.P. Morgan mutual funds."

Edited by: Neil Anderson, Managing Editor


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