April 15, 2024

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JPMorgan Fined $348 Million for Lapses in Trade Monitoring

2 min read

JPMorgan Chase plays a part in trillions of dollars of financial market trading around the world every day, but federal regulators said the bank’s systems for sharing details of that activity with them had not been working properly for about a decade. Those lapses are costing it more than $348 million in fines — and more could follow.

On Thursday, the bank’s main federal regulator, the Office of the Comptroller of the Currency, fined JPMorgan $250 million over the omissions. The action followed a $98.2 million penalty from the Federal Reserve on March 8. The bank recently told investors in a public filling that a third regulator is preparing a separate action that is likely to come with its own monetary penalty.

The breaches at the bank, which occurred from around 2014 until 2023, affected regulators seeking data on financial market activity to help catch instances of misbehavior, like insider trading and market manipulation. JPMorgan was not retaining and sharing information about trades made by customers and businesses in connection with around 30 different trading platforms and venues, the regulators said.

Brian Marchiony, a JPMorgan spokesman, said the bank found the problems on its own and notified regulators. JPMorgan did not expect any services to customers to be disrupted as it works to fix the problems, he said.

“Significant remedial actions have been taken and others are underway,” Mr. Marchiony said. “We have not found any employee misconduct or harm to clients or the market in our review of the previously uncaptured data.”

The documents filed by the regulators laying out the penalties offered few details about the kinds of information that JPMorgan was failing to collect and report, saying only that the bank had failed to account for “billions of instances of trading activity.” That could include messages about trading orders sent between JPMorgan employees and clients.

Regulators, including the Securities and Exchange Commission and the Commodity Futures Trading Commission, have also been cracking down recently on how traders at big banks communicate with their clients, penalizing the banks for allowing traders to use WhatsApp and other encrypted messaging services that are not as easy to track as emails or recorded voice calls.

JPMorgan must monitor trading platforms including exchanges like the New York Stock Exchange and online platforms like Tradeweb. The regulators did not specify which venues were involved in the lapses and Mr. Marchiony declined to name them.

A spokeswoman for the O.C.C. declined to comment.


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