JP Morgan May Be Liable for Misleading Customers Regarding Broker Compensation

Last week, JP Morgan agreed to pay $4 million to settle charges that it misled customers about its brokers’ compensation, according to the Securities and Exchange Commission (SEC). The SEC said that the bank falsely stated on its private banking website and in marketing materials that advisers are compensated “based on our clients’ performance; no one is paid on commission.” The subsequent investigating revealed that brokers are, in fact, paid a salary and a discretionary bonus. The SEC also stated that the claims were made from 2009 until 2012 and in marketing materials including a prospecting card, a pitch book and a marketing letter. There were four separate instances between the dates, but the firm did not make moves to correct the statement until May 2012. JP Morgan Securities agreed to be censured and cease and desist from future similar violations.

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