SEC Slaps JPMorgan with $125 Million Fine for Recordkeeping Failures

The Securities and Exchange Commission (SEC) recently announced that it has charged J.P. Morgan Securities LLC (JPMS), a broker-dealer subsidiary of JPMorgan Chase & Co., to pay a penalty of $125 million for widespread and longstanding failures to maintain and preserve written communications.

From at least January 2018 through November 2020, JPMS's employees often communicated about securities business matters on their personal devices, using text messages, WhatsApp, and personal email accounts.

However, none of these records were preserved by the firm as required by the federal securities laws. JPMS further admitted that these failures were firm-wide and that practices were not hidden within the firm.

JPMS acknowledged that its recordkeeping failures deprived the SEC staff of timely access to evidence and potential sources of information for extended periods of time and in some instances permanently. As such, the firm's actions meaningfully impacted the SEC's ability to investigate potential violations of the federal securities laws.

"Recordkeeping requirements are core to the commission's enforcement and examination programs and when firms fail to comply with them, as JPMorgan did, they directly undermine our ability to protect investors and preserve market integrity,"said Gurbir S. Grewal, Director of the SEC's Division of Enforcement.

Last week, the commission also announced the regulator's new Chief Administrative Law Judge, James E. Grimes​, who succeeds Brenda Murray after her retirement. Brenda served as SEC's Chief Administrative Law Judge for 25 years.