JPMorgan fined $2.4m for its relationship managers’ misconduct

JPMorgan Chase Bank has been fined $2.4 million by regulators for its relationship managers’ misconduct.

The Monetary Authority of Singapore (MAS) on Dec 2 said it imposed a civil penalty on the bank for failing to prevent and detect misconduct committed by its relationship managers.

It said the relationship managers had made inaccurate or incomplete disclosures to clients in 24 over-the-counter (OTC) bond transactions that took place between November 2018 and September 2019.

The incomplete and inaccurate disclosures meant that the clients were charged spreads that were above bilaterally agreed rates. A spread is the difference between the buying or bidding price and that of the selling or asking price of an asset or security. 

MAS said investigations found that for OTC bond transactions, the bank’s practice was to charge clients a spread over the interbank prices.

As the interbank prices were not available to clients, they had to rely on the relationship manager’s representations to them.

“JPMorgan did not establish adequate processes and controls to ensure that its relationship managers adhered to pre-agreed spreads with clients when executing OTC bond transactions on their behalf,” MAS said.

It added that the relationship managers had either misrepresented the price components or omitted material information that the spreads charged were above the agreed rates, in contravention of the Securities and Futures Act (SFA).

The bank, which admitted to breaching the SFA, has refunded the overcharged fees to affected clients.

When asked, JP Morgan Private Bank said it is pleased to have this matter resolved.

“In 2020, after completing our internal review, JP Morgan Private Bank fully reimbursed affected clients, which represents a very small portion of the total trades processed during the related period,” it said.

The private bank added that it undertook a comprehensive update to its internal controls, monitoring and training framework to ensure its trade governance, pricing transparency and compliance principles continue to be upheld.

Separate reviews into the individual relationship managers involved in the misconduct are ongoing, MAS added.

The fine comes after MAS’ review of pricing and disclosure practices in the private banking industry.

Fines imposed on financial institutions for similar incidents have also happened in the past.

For instance in December 2023, Credit Suisse, which is now part of UBS, was fined $3.9 million for misconduct by its relationship managers.

In November 2019, UBS was fined $11.2 million for deceptive trades by client advisers.

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