JPMorgan to settle U.S. charges over asset unit's disclosures

Thu Dec 17, 2015 3:09pm EST
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By Sarah N. Lynch

WASHINGTON (Reuters) - JPMorgan Chase & Co (JPM.N: Quote) is expected to strike a settlement with U.S. regulators on Friday to resolve charges over failing to disclose that it preferred putting clients into some of its own funds and other proprietary products, according to people familiar with the matter.

The bank is expected to pay at least $200 million to resolve parallel civil charges by both the Securities and Exchange Commission, as well as the Commodity Futures Trading Commission, one of the people said on Thursday.

At issue is whether JPMorgan's asset management unit preferred putting clients into its own in-house funds, a practice that in turn let the bank earn a fee, another person said. Such arrangements were not properly disclosed, the source told Reuters

A spokesman for JPMorgan declined to comment on the pending settlement. The sources asked not to be named because the settlement had yet to be made public.

JPMorgan previously disclosed the investigation to investors in its SEC filings.

In its quarterly report released in August, the bank said it had received subpoenas from the SEC and other regulators over its disclosures concerning "conflicts" associated with its sale and use of in-house products such as mutual funds and its wealth management business.

The investigation also covers its private bank disclosures in connection with the use of hedge funds that pay placement agents fees to the bank's brokerage affiliates, the bank has said.

In September 2012, a group of wealth management and private banking clients filed a class action lawsuit against the bank, saying JPMorgan placed its clients into funds and investments with fee-based accounts.   Continued...

A view of the exterior of the JP Morgan Chase & Co. Corporate headquarters in the Manhattan borough of New York City, May 20, 2015. REUTERS/Mike Segar