J.P. Morgan Securities LLC Settles SEC Charges Over Alleged Prohibited SBS Activity

J.P. Morgan Securities LLC and JPMorgan Chase Bank, N.A. consented to an SEC order finding that they let a statutorily disqualified person effect or be involved in effecting security-based swap transactions on their behalf, according to an administrative order the SEC posted Oct. 2.

The order says the associated person effected 100 SBS transactions with or for US counterparties and supervised sales traders who executed at least 700 SBS transactions with or for US counterparties before the SEC granted permission for that activity on March 1, 2024.

The SEC found that J.P. Morgan violated the statutory requirement that it not "permit a statutorily disqualified person associated with J.P. Morgan to effect or be involved in effecting SBS transactions on its behalf." According to the order, J.P. Morgan also did not have a system reasonably designed to detect and prevent prohibited SBS activity by a statutorily disqualified person.

J.P. Morgan identified the transactions shortly after the SEC granted permission and self-reported to SEC staff on June 24, 2024, the order says. The SEC said it considered the self-reporting and certain remedial acts. In August, J.P. Morgan adopted new procedures that include a monthly trade review, according to the order.

The order requires both entities to cease and desist from further violations and censures them. They consented to the order without admitting the findings, except as to the SEC's jurisdiction. The release describes J.P. Morgan Securities as a registered investment adviser.