The city-state's regulator forces the US-based institution to cough up a civil penalty related to relationship managers overcharging clients on over-the-counter bond trades.
The Monetary Authority of Singapore (MAS) has levied a penalty of S$2.4 million ($1.8 billion) on JPMorgan Chase Bank over relationship manager misconduct.
According to an announcement issued Monday, the private banking business relationship managers made «inaccurate or incomplete» disclosures to clients that resulted in them being charged spreads «above the bilaterally agreed rates».
Not Available
«This enforcement action on JPM follows MAS’ review of pricing and disclosure practices in the private banking industry. Investigations found that for OTC bond transactions, JPM’s practice was to charge clients a spread over the interbank prices. As the interbank prices were not available to clients, they had to rely on the RMs’ representations to them regarding the interbank prices and spreads,» the MAS indicated.
The regulator maintained that the bank did not have the necessary processes and controls in place to make sure that its relationship managers kept to pre-agreed spreads when executing over-the-counter bond transactions.
Misrepresented or Omitted
That resulted in the bankers either misrepresenting the price components of the bond trades in question or omitting the material information that the spreads being charged were above the agreed rates.
«JPM has admitted liability under section 236C of the SFA for its failure to prevent or detect the misconduct by its RMs and has paid MAS the civil penalty. The bank has refunded the overcharged fees to affected clients,» the MAS stated.
The bank has also enhanced its pricing frameworks and internal controls to prevent the recurrence of such misconduct. Separate reviews into the individual RMs involved in the misconduct are ongoing.»
Bank Response
In response, a spokesperson for J.P. Morgan Private Bank said that it found «certain deficiencies in past pricing and disclosure practices» in a review that was part of an industrywide thematic inspection.
Upon completing the internal review in 2020, the bank fully reimbursed affected clients «which represents a very small portion of the total trades processed during the related period». It also undertook a comprehensive update to its internal controls, monitoring and training framework to ensure that trade governance, pricing transparency and compliance principles continue to be upheld.
«We are pleased to have this matter resolved and remain dedicated to delivering an exceptional experience for our clients,» the spokesperson said.
