The Financial Industry Regulatory Authority (FINRA) fined JP Morgan Securities $500,000 for allegedly failing to supervise the execution and approval of powers of attorney submitted by non-U.S. resident customers of the bank. FINRA alleged that JP Morgan failed to detect irregularities in hundreds of powers of attorneys, including missed dates, signatures and other information required on the forms by the firm. The bank also failed to make sure that registered representatives acted as witnesses when the forms were signed. FINRA claimed that these transgressions occurred because the reps were trying to accommodate customers. In a filing written by FINRA, the regulator stated that had the firm investigated these red flags, it would have “prevented these practices, which were prevalent, from occurring.” JP Morgan was fined $500,000 and censured and ordered to implement written supervisory policies and procedures for the execution and approval of powers of attorneys from non-U.S. resident customers of the private bank. The bank has 90 days to certify in writing that it has implemented such procedures.
These POAs are often at issue in FINRA arbitration claims against brokerage firms. Sometimes the person with a POA will churn the account or make grossly unsuitable investment purchases. The resulting investment losses then become an issue in a FINRA arbitration hearing. The firm argues the person with the POA is responsible for the losses and the investor argues it was the broker and firm that shouldnt have let the person with authority over the account engage in the trading at issue. To learn if investment losses with a POA holder can be recovered, please call our Chicago investment fraud lawyers.