JPMorgan Chase & Co. to pay $125 Million Penalty Over Messaging Apps

On December 17th, 2021, the Securities and Exchange Commission (“SEC”) released an order stating that employees of J.P. Morgan Securities, a JPMorgan Chase & Co. (“JP Morgan”) broker-dealer subsidiary, were often engaging in business communications on personal devices. Employees utilized un-captured applications such as WhatsApp and personal email addresses for business communications. The firm did not preserve these un-captured communications, therefore violating book-and-record-keeping requirements. JPMorgan has admitted to the SEC’s findings and understands that it was unlawful, claiming to have adjusted their policies to accommodate for these errors.

The order released by the SEC indicated that the JPMorgan communication violations “involved employees at all levels of authority,” even supervisors who “routinely communicated using their personal devices.” Through the SEC’s investigation it was found that higher-grade executives established a WhatsApp group chat in April 2019 and included 19 members. Within an 8-month life span, the group chat generated 1,100 messages involving topics such as investment strategy, client meetings and market trends. Additionally, an executive director in capital markets texted hundreds of colleagues and dozens of clients, customers and market participants between November 2019 and November 2020. 

This settlement draws attention to books-and-records compliance policies as well as overall compliance policies. JPMorgan is expected to pay $125 Million in settlements, with SEC Enforcement Director Gurbir Grewal stating, “We encourage registrants to not only scrutinize their document preservation processes and self-report failures such as those outlined in today’s action before we identify them, but to also consider the types of policies and procedures JPMorgan implemented to redress its failures in this case.”