Our law firm is investigating the sales practices of JPMorgan Chase in connection with the firm’s sales of JPMorgan Chase proprietary mutual funds and Chase Strategic Portfolios, as well as potential claims on behalf of investors of these products. KlaymanToskes is also looking into whether JPMorgan advisors engaged in improper mutual fund switching which may have occurred when the firm acquired Washington Mutual, including “switching” customers out of WaMu funds and into JPMorgan Funds.
In July 2012, The New York Times published an article stating that the bank’s financial advisors were reportedly “encouraged, at times, to favor JPMorgan’s own products even when competitors had better-performing or cheaper options.” Further, the article stated that JPMorgan documents revealed that “with one crucial offering, the bank exaggerated the returns of what it was selling in marketing materials.” It has also been reported that several regulators, including the Securities and Exchange Commission (“SEC”) and The Financial Industry Regulatory Authority (“FINRA”), have initiated inquires into JPMorgan’s fund sales practices. According to Morningstar, a well known fund researcher, over past three years, about 42% of JPMorgan’s funds failed to beat the average performance of funds that make similar investments. And yet, the firm reportedly continued to promote its own funds, placing its interests ahead of its clients’.
One of the main products reportedly pushed by JPMorgan was the Chase Strategic Portfolio. The investment consists of a combination of about 15 mutual funds, some of which are developed by JPMorgan. The product is designed to offer ordinary investors holdings in stocks and bonds, with six main models that vary the level of risk. Launched in 2008, the fund has about $20 billion in assets, according to documents reviewed by The New York Times. In addition to assessing an annual fee of up to 1.6% on the assets in Chase Strategic Portfolio, the firm levies a fee on the underlying JPMorgan funds as well. The New York Times stated that “marketing materials for the balanced portfolio show a hypothetical annual return of 15.39 percent after fees for three years through March 31.” In reality, however, “the actual return was 13.87 percent a year, trailing the hypothetical performance and the benchmark. All four models with three-year records were lower than the hypothetical performance and the benchmarks,” The New York Times reported.
Customers of JPMorgan who invested in the firm’s propriety mutual funds and Chase Strategic Portfolio can contact KlaymanToskes to explore their legal rights and options.