SEC censures J.P. Morgan units after disqualified employee handled 800 security-based swap trades
J.P. Morgan Securities and JPMorgan Chase Bank consented to a cease-and-desist order after an employee barred from swap dealing over a 2011 U.K. fine executed and supervised trades for more than two years; the firms avoided a monetary penalty because they self-reported.
The Securities and Exchange Commission said October 2 it has censured J.P. Morgan Securities LLC and JPMorgan Chase Bank, N.A. for allowing a statutorily disqualified employee to effect or supervise at least 800 security-based swap transactions with U.S. counterparties between November 2021 and March 2024.
According to the SEC’s order, the employee had been statutorily disqualified from participating in security-based swap activity because of a 2011 U.K. regulatory fine, and lacked the separate SEC permission required to effect or supervise swap transactions during the period in question, yet continued doing so for more than two years before the issue was identified.
Both firms consented to the cease-and-desist order without admitting or denying the SEC’s findings. The SEC said it did not impose a monetary penalty because JPMorgan self-reported the issue and undertook remedial measures, though the agency’s order did not detail what those remedial measures were.
Statutory disqualification provisions bar individuals with certain past regulatory violations or sanctions — including ones issued by foreign regulators — from engaging in specified securities activities without separate SEC permission. The case illustrates how a sanction from a non-U.S. regulator can trigger a U.S. disqualification that a firm’s internal compliance screening is still expected to catch.
Neither the SEC’s order nor JPMorgan has disclosed the employee’s name, role, or current employment status, nor whether any of the roughly 800 swap transactions at issue are being unwound or otherwise affected by the finding. As with other no-penalty settlements tied to self-reporting, the disclosed consequence for JPMorgan is limited to the censure itself, absent further remediation details the firms have not made public.