Securities Regulation Daily JP Morgan’s $950,000 agreement prompts Indiana’s $95,000 whistleblower award
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Monday, August 22, 2016

JP Morgan’s $950,000 agreement prompts Indiana’s $95,000 whistleblower award

By Jay Fishman, J.D.

The Indiana Securities Division awarded a whistleblower $95,000, the maximum award allowed under Indiana’s whistleblower statute, for providing the Division with proof of JP Morgan Chase Bank’s (JPMCB) failure to disclose to Indiana clients important information about certain funds they were invested in that the Division’s own investigation would not have uncovered.

Whistleblower action. The whistleblower, after spending countless hours gathering sensitive documents to build a case against JPMCB, contacted the Division in 2014 to reveal that JPMCB was putting its own interests ahead of Indiana clients invested in a JPMCB discretionary account by not disclosing that additional investment options outside JPMCB were available to them. The whistleblower flew to Indianapolis at the individual’s own expense to conduct a recorded interview and to answer investigator questions.

Connie Lawson, the Indiana Secretary of State, said that "this case is the perfect example of why the whistleblower statute is in place. Without the individual coming forward, the office would not have uncovered this issue and Hoosiers would still be at risk. Thanks to Indiana law, we are able to provide a safe environment for individuals to come forth and protect Hoosiers from wrongful securities practices."

JPMCB consent agreement. After the whistleblower came forward, the Division filed an executed consent agreement with JPMCB to be reviewed by the Indiana Securities Commissioner (In the Matter of JP Morgan Chase Bank, July 27, 2016). The whistleblower’s documents and statements revealed that while JPMCB had at all relevant times disclosed that it had a conflict of interest when it invested its Indiana clients’ discretionary portfolio assets in certain JPMCB proprietary funds, it failed to tell those clients that some of the proprietary funds offered institutional shares that were less expensive that the institutional shares JPMCB chose for the clients. The consent agreement ordered JPMCB to pay the Division $950,000.

Companies: JP Morgan Chase Bank, N.A.; JP Morgan Chase Securities LLC

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