Multinational banking and holdings company JPMorgan Chase agreed to pay $307m in order to settle filed charges after two of its wealth management units failed to disclose conflicts of interest when promoting investments to its prime investors, according to an article written for The Guardian.
The bank admitted the unusual move of steering retail investors towards the firm's own products without considering disclosing that preference properly. As a result, JPMorgan Chase agreed to pay $267m to the Securities and Exchange Commission (SEC), and $40m to the US Commodity Futures Trading Commission (CFTC).
Director of SEC enforcement division Andrew Ceresney said that every firm has an obligation to communicate all conflicts in order for the client to fairly judge the investment advice they are receiving.
Between periods 2008 and 2013, the bank reportedly failed to properly disclose its preferences to retail mutual fund customers as well to clients with high net worth.
On the other hand, CFTC found that the banking services company also failed to disclose entirely its preference for investing the client funds in hedge funds and mutual funds which were operated by the affiliates of the company.
CFTC's director of enforcement, Aitan Goelman said: "Investors are entitled to know if a bank managing their money favors placing investments in its own proprietary funds or other vehicles that generate fees for the bank." Goelman added that CFTC and its partners in this cause will fulfil their duties as watchdogs and aggressively pursue financial institutions that has failed in providing adequate disclosures to clients.
In a statement by a JPMorgan representative, the company have always strived for full transparency in client communications. JPMorgan also have further enhanced disclosures to achieve transparency in the last two years and the said issue were not intentional and that the company regret that it happened.
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