J.P. Morgan Securities Settles $18 Million SEC Case Over Whistleblower Violations
From the Desk of Jim Eccleston at Eccleston Law
J.P. Morgan Securities faced a significant penalty as it settled charges brought by the Securities and Exchange Commission (SEC) regarding actions that hindered clients from reporting potential securities law violations.
Without admitting guilt, the firm agreed to a censure, pledged to cease and desist from violating whistleblower protection rules, and agreed to pay an $18 million civil penalty. The SEC's investigation revealed that from March 2020 to July 2023, the firm routinely asked retail clients to sign confidential release agreements if they received credits or settlements exceeding $1,000.
As reported by ThinkAdvisor, the agreements compelled clients to maintain confidentiality regarding the settlement and related account information, with at least 362 clients signing such releases since 2020. Despite allowing clients to respond to SEC inquiries, the agreements prohibited them from contacting the SEC voluntarily. This action violated Rule 21F-17(a) of the Securities Exchange Act of 1934, which safeguards whistleblowers from impediments to communicating directly with SEC staff about potential securities law breaches.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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