SEC Charges JP Morgan $18 Million for Obstructing Client Whistleblowing

<p>The
Securities and Exchange Commission (SEC) announced today that JP Morgan
Securities LLC (JPMS) has settled charges related to obstructing advisory
clients and brokerage customers from reporting potential securities law
violations. JPMS has agreed to pay an $18 million civil penalty as part of the
settlement.</p><p>Coercing
Client Silence with Confidential Agreements</p><p>According
to the SEC's order, JPMS engaged in the practice of requesting retail clients
to sign confidential release agreements between March 2020 and July 2023. These
agreements were presented to clients who had received credits or settlements
from the firm exceeding $1,000. The terms of the agreements compelled clients
to maintain confidentiality regarding the settlement, underlying facts, and
information related to the account in question. Importantly, while the
agreements allowed clients to respond to SEC inquiries, they expressly
prohibited clients from voluntarily contacting the SEC.</p><p>The
SEC's Director of Enforcement, Gurbir S. Grewal, emphasized the illegality of
including provisions that prevent individuals from reporting wrongdoing to the
SEC. Grewal stated: "For several years, it forced certain clients into the
untenable position of choosing between receiving settlements or credits from
the firm and reporting potential securities law violations to the SEC. This
either-or proposition not only undermined critical investor protections and
placed investors at risk but was also illegal."</p><blockquote><p lang="en" dir="ltr">JP Morgan Settles for $18M Over Whistleblower Violations, SEC Announces