The Securities and Exchange Commission fined J.P. Morgan Securities $125 million for "widespread" failures to retain employee communications on personal mobile devices, messaging apps, and emails and said it is investigating similar infractions at other financial organizations.
The broker-dealer unit of JPMorgan acknowledged the accusations and for breaking securities laws. In addition to the fine, the company agreed to make significant modifications to its compliance standards, according to the SEC.
The SEC stated that "the firm's actions had a significant impact on the SEC's capacity to investigate potential violations of federal securities laws."
The fine is one of the first big enforcement measures taken by SEC Chair Gary Gensler, who was selected by Democrats and has promised to crack down on Wall Street corruption.
When J.P. Morgan Securities was unable to produce records over the course of other investigations, the SEC learned that the broker had been breaking rules requiring businesses to retain written business interactions.
The SEC has begun investigations into other corporations' record-keeping practices as a result of the JPMorgan examination, it said, corroborating a Reuters report from October.
"This is a problem we're seeing at other organizations," an SEC official said, adding that "self-reporting people and entities will fare better in penalty talks."
According to the SEC, J.P.Morgan Securities workers often spoke with securities business matters on their personal devices, utilizing text messages, WhatsApp, and personal email accounts, from at least January 2018 through November 2020.
None of these documents were saved. According to the SEC, the errors affected the whole institution and were known to senior management, who also used personal devices to discuss company affairs.
J.P. Morgan Securities also committed, among other things, to hire a compliance expert and conduct a full review of its rules and processes relating to the retention of electronic communications located on personal devices.