Thursday, 5 December 2024
MAS fines JPMorgan Chase $2.4M for relationship manager misconduct
The Monetary Authority of Singapore (MAS) has imposed a civil penalty of $2.4 million on JPMorgan Chase Bank, N.A. (JPM), for failing to prevent and detect misconduct committed by its relationship managers (RMs).
In 24 over-the-counter (OTC) bond transactions, the RMs had made inaccurate or incomplete disclosures to clients, resulting in the clients being charged spreads that were above the bilaterally agreed rates.
This enforcement action on JPM follows MAS’ review of pricing and disclosure practices in the private banking industry. Investigations found that for OTC bond transactions, JPM’s practice was to charge clients a spread over the interbank prices. As the interbank prices were not available to clients, they had to rely on the RMs’ representations to them regarding the interbank prices and spreads.
JPM did not establish adequate processes and controls to ensure that its RMs adhered to pre-agreed spreads with clients when executing OTC bond transactions on their behalf. MAS sampled OTC bond transactions conducted by JPM’s RMs and found that in the 24 transactions, RMs had either misrepresented the price components or omitted material information that the spreads charged were above the agreed rates, in contravention of sections 201(c) and 201(d) of the Securities and Futures Act (SFA).
JPM has admitted liability under section 236C of the SFA for its failure to prevent or detect the misconduct by its RMs and has paid MAS the civil penalty. The bank has refunded the overcharged fees to affected clients. The bank has also enhanced its pricing frameworks and internal controls to prevent the recurrence of such misconduct. Separate reviews into the individual RMs involved in the misconduct are ongoing.
Re-disseminated by The Asian Banker
