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JPMorgan Fined $348 Million For Decade-Long Trade Monitoring Failures

By Nithya Bose in Business News, posted March 15, 2024

JPMorgan Chase has been fined $348 million over failures in its trade monitoring systems, which have persisted for nearly a decade.

Federal authorities pinpointed shortcomings in the bank's procedures for reporting trading activities.

These are essential for regulatory oversight and the detection of financial misconduct such as insider trading and market manipulation.

The Office of the Comptroller of the Currency (OCC), JPMorgan's primary federal overseer, imposed a $250 million fine on the bank for these lapses.

This penalty comes after a $98.2 million fine levied by the Federal Reserve on March 8.

JPMorgan also disclosed in a public filing to investors it expects more action and fines from a third federal regulator.

Issues went on for nearly a decade

The identified issues span from 2014 to 2023.

They involve JPMorgan's failure to retain and disseminate crucial trade data across approximately 30 trading platforms.

This data is critical for regulators monitoring market activities and ensuring fairness and transparency.

Brian Marchiony, a spokesperson for JPMorgan, said the bank discovered these issues independently and promptly informed the regulatory authorities.

He reassured that customer services would remain unaffected as the bank implements necessary corrections.

Mr. Marchiony said: “Significant remedial actions have been taken and others are underway.

“We have not found any employee misconduct or harm to clients or the market in our review of the previously uncaptured data.”

The regulatory filings detail the bank's omission of "billions of instances of trading activity" but do not elaborate on the specific types of data missed.

These could range from trade orders between JPMorgan employees and their clients to other relevant transaction details.

This situation emerges amid a broader regulatory crackdown on communication practices within major banks.

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It targets using encrypted messaging services by traders for client communications, which are harder to monitor than traditional emails or recorded calls.

The OCC did not disclose specific trading platforms and venues affected by JPMorgan's reporting lapses, and Marchiony declined to provide further details.

However, the bank is expected to monitor various platforms, including major exchanges and online trading sites.

The OCC has yet to make an official statement regarding the fines.

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