Leading U.S. bank JPMorgan Chase (JPM) has agreed to pay $151 million in penalties to settle charges of misconduct for failing to act in the best interest of its clients.
The U.S. Securities and Exchange Commission (SEC) had accused JPMorgan of issuing misleading disclosures and failing to make recommendations in the best interest of its customers. The charges involved J.P. Morgan Securities, the bank’s brokerage unit, and J.P. Morgan Investment Management, which oversees its mutual funds.
In a statement, the SEC said that, “JPMorgan’s conduct across multiple business lines violated various laws designed to protect investors from the risks of self-dealing and conflicts of interest.” For its part, JPMorgan said that it neither admitted or denied the SEC’s charges but that it was pleased to resolve the matter. JPMorgan is the world’s largest bank with more than $3 trillion of assets under management.
Putting Customers Second
In charging JPMorgan, the SEC said that its investigation found J.P. Morgan Securities recommended mutual funds to customers when similar and less expensive exchange-traded funds (ETFs) were available. More than 10,000 clients of JPMorgan were sold more expensive mutual funds, said the SEC.
J.P. Morgan Securities also failed to fully disclose the financial incentives its advisors earned when they sold more expensive mutual funds rather than passively managed ETFs. The SEC added that the bank’s brokerage unit made misleading disclosures to customers who invested in its private funds.
JPM stock has gained 34% this year.
Is JPM Stock a Buy?
The stock of JPMorgan Chase has a consensus Moderate Buy rating among 19 Wall Street analysts. That rating is based on 13 Buy, six Hold, and no Sell recommendations issued in the last three months. The average JPM price target of $234 implies 5.04% upside from current levels.
