Washington, D.C. – JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC, and J.P. Morgan Securities plc (collectively, JPMorgan) have been penalized by the Commodity Futures Trading Commission (CFTC) for failing to comply with recordkeeping regulations and for inadequate supervision, according to an order issued December 17, 2021.
The CFTC found that since at least July 2015, JPMorgan employees, including those in senior positions, used unapproved communication channels – specifically personal text messages and WhatsApp – to discuss business matters. These communications, which should have been preserved under CFTC rules, were not maintained by JPMorgan and could not be provided to the CFTC when requested during an investigation.
The order details that the use of these unauthorized channels violated JPMorgan’s internal policies, which prohibited such communications. Furthermore, the firm lacked sufficient internal controls to prevent or detect the use of these methods, and some supervisory personnel themselves engaged in business-related communications on these unapproved platforms.
As a result of these violations, JPMorgan will pay a $75 million civil monetary penalty. The firm is also required to cease and desist from further violations of recordkeeping and supervision requirements and to implement specific corrective measures.
“Maintenance of complete and accurate books and records is required in order to operate in our industry, as is diligent supervision,” stated Acting Chairman Rostin Behnam. “Registrants, supervisors, and compliance officers must understand these regulations and adhere to them and their firm’s guidance when conducting their business.”
Acting Director of Enforcement Vince McGonagle added, “Firm compliance with recordkeeping and associated supervision requirements is essential to the CFTC’s efforts to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets.”
The CFTC’s investigation was initially prompted by a separate trading investigation, during which staff issued subpoenas for communications. The Division of Enforcement discovered the use of personal text messages and WhatsApp through information received from a third party, revealing that these communications contained responsive information to the subpoenas.
Source: CFTC.gov
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