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JPMorgan (JPM) to Pay $350M Civil Penalty Over Reporting Lapses
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In order to settle claims that JPMorgan (JPM - Free Report) reported incomplete trading data to surveillance platforms, the bank will have to pay a civil penalty of $350 million to two U.S. regulators.
When inquired about its trading processes, the Wall Street giant noted that certain trading and order data through its Corporate and Investment Bank unit was not fed into its trade surveillance platforms.
JPM stated, “While the identified gaps represent a fraction of the overall activity across the Corporate and Investment Bank (CIB), the data gap on one venue, which largely consisted of sponsored client access activity, was significant.”
However, the bank has “not identified any employee misconduct, harm to clients or the market.”
While the $350-million payment will resolve the matter with two regulators, the bank is in advanced negotiations with a third regulator, which might not result in a resolution.
Over the past three months, JPM shares have gained 16.8% compared with the industry’s 15.8% growth.
In November 2023, Morgan Stanley (MS - Free Report) agreed on a $6.5-million settlement with six state attorneys general, led by New York attorney general Letitia James. The firm’s U.S. wealth management business, earlier known as Morgan Stanley Smith Barney LLC, was charged with failing to protect customers’ personal information while shutting down two data centers in 2016.
MS was accused of negligence in properly decommissioning computers that contained unencrypted customer data.
According to the agreement released by attorney general James, “Morgan Stanley failed to decommission its computers and erase unencrypted data in certain computer devices that were later auctioned while still containing consumers’ personal information, including data belonging to 1.1 million New Yorkers.”
Likewise, Washington Trust Bancorp, Inc.’s (WASH - Free Report) wholly-owned subsidiary, The Washington Trust Company, agreed on a settlement with the U.S. Department of Justice to resolve allegations that Washington Trust violated fair lending laws in Rhode Island between 2016 and 2021.
WASH was required to provide $7 million in mortgage loan subsidies for mortgage, home improvement or refinance loans in specific census tracts in Rhode Island over five years.
Also, the company had to commit $2 million for focused community outreach and marketing efforts.
The settlement did not include any civil monetary penalties.
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JPMorgan (JPM) to Pay $350M Civil Penalty Over Reporting Lapses
In order to settle claims that JPMorgan (JPM - Free Report) reported incomplete trading data to surveillance platforms, the bank will have to pay a civil penalty of $350 million to two U.S. regulators.
When inquired about its trading processes, the Wall Street giant noted that certain trading and order data through its Corporate and Investment Bank unit was not fed into its trade surveillance platforms.
JPM stated, “While the identified gaps represent a fraction of the overall activity across the Corporate and Investment Bank (CIB), the data gap on one venue, which largely consisted of sponsored client access activity, was significant.”
However, the bank has “not identified any employee misconduct, harm to clients or the market.”
While the $350-million payment will resolve the matter with two regulators, the bank is in advanced negotiations with a third regulator, which might not result in a resolution.
Over the past three months, JPM shares have gained 16.8% compared with the industry’s 15.8% growth.
Image Source: Zacks Investment Research
Currently, JPM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Legal Issues Faced by Other Finance Companies
In November 2023, Morgan Stanley (MS - Free Report) agreed on a $6.5-million settlement with six state attorneys general, led by New York attorney general Letitia James. The firm’s U.S. wealth management business, earlier known as Morgan Stanley Smith Barney LLC, was charged with failing to protect customers’ personal information while shutting down two data centers in 2016.
MS was accused of negligence in properly decommissioning computers that contained unencrypted customer data.
According to the agreement released by attorney general James, “Morgan Stanley failed to decommission its computers and erase unencrypted data in certain computer devices that were later auctioned while still containing consumers’ personal information, including data belonging to 1.1 million New Yorkers.”
Likewise, Washington Trust Bancorp, Inc.’s (WASH - Free Report) wholly-owned subsidiary, The Washington Trust Company, agreed on a settlement with the U.S. Department of Justice to resolve allegations that Washington Trust violated fair lending laws in Rhode Island between 2016 and 2021.
WASH was required to provide $7 million in mortgage loan subsidies for mortgage, home improvement or refinance loans in specific census tracts in Rhode Island over five years.
Also, the company had to commit $2 million for focused community outreach and marketing efforts.
The settlement did not include any civil monetary penalties.