KlaymanToskes Investigates JP Morgan in Light of OCC $250 Million Civil Money Penalty Against JP Morgan Chase Bank, N.A. for Inadequate Supervision of Investment Advisory Business

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Updated on: December 3, 2020

On November 24, 2020, the Office of the Comptroller of the Currency (“OCC”) announced it would assess a $250 million civil money penalty against JPMorgan Chase Bank, N.A.  The OCC is responsible for the regulatory oversight of all Commercial Banks, including Bank Holding Companies such as JP Morgan Chase, which has under its umbrella of financial companies, broker dealer JP Morgan.  According to the news release, OCC “intends to initiate civil money penalty proceedings against the Bank pursuant to 12 U.S.C. § 1818(i), through the issuance of a Notice of Assessment of a Civil Money Penalty, for engaging in unsafe or unsound practices, including those relating to internal controls and internal audit for its fiduciary activities, and for violating 12 C.F.R. § 9.9.”

The OCC reference to “unsafe and unsound practices” mentioned in the OCC Consent Order relates to the Bank Holding Company failure to maintain adequate internal controls and internal audit over its fiduciary business.  According to the OCC, JP Morgan Chase “maintains one of the world’s largest and most complex fiduciary businesses with total fiduciary and related assets of $29.1 trillion, including $1.3 trillion in fiduciary assets and $27.8 trillion of non-fiduciary custody assets. The Bank provides a broad range of investment strategies to its fiduciary clients through a variety of investment vehicles.”

The OCC found the bank’s risk management practices were deficient in meeting its regulatory requirements which led to an inadequate supervisory system unable to detect and avoid conflicts of interests in client fiduciary accounts it managed.  As a result, a Consent Order for a civil money penalty in the total amount of $250,000,000, was assessed upon the execution of this Order.

The investigation has been launched to determine whether, JP Morgan failed to supervise the investment advisory business with adequate audit and controls measures.  Furthermore, the investigation focuses on whether JP Morgan and its financial advisors misrepresented material facts and disclosures to clients about conflicts of interest when making recommendations in client accounts.

The sole purpose of this Blog Post is to investigate investment recommendations provided by JP Morgan in client fiduciary accounts.  Investors are encouraged to contact Lawrence L. Klayman, Esq., at (561) 542-5131, and download our Special Investor Report.