The Securities and Exchange Commission (SEC) today announced settled charges against JP Morgan Securities LLC (JPMS) for preventing hundreds of advisory and brokerage clients from reporting potential securities law violations to the SEC. JPMS agreed to pay an $18 million civil penalty to settle the charges.
According to the SEC order, from March 2020 to July 2023, JPMS regularly asked retail customers to sign confidential release agreements if they had been issued a credit or settlement by the company of more than $1,000.
The agreements required customers to keep confidential the settlement, all underlying facts about the settlement and all information about that account. Additionally, although the agreements allowed customers to respond to SEC inquiries, they did not allow customers to voluntarily contact the SEC.
The SEC order finds that JPMS violated Rule 21F-17(a) under the Securities Exchange Act of 1934, a whistleblower protection rule that prohibits taking any action to prevent a person from communicating directly with its staff SEC regarding potential securities law violations. Without admitting or denying the SEC’s findings, JPMS agreed to be fined, cease and desist from violating the whistleblower protection rule, and pay the $18 million civil penalty.