Two J.P. Morgan Firms Fined over Deficiencies
J.P. Morgan Securities and J.P. Morgan Clearing Corp. have been fined $775K and $250K respectively for several deficiencies. J.P. Morgan Securities is a broker-dealer of the bank JPMorgan Chase (JPM). .J.P. Morgan Clearing is the custodian, clearing, lending, and settlement arm of the bank. The fines were imposed by FINRA.
According to the self-regulatory organization, the firms committed a number of breaches that violated FINRA and SEC rules. The alleged violations by the brokerage firm mostly affect clients of J.P. Morgan Private Bank and JPMS Heritage Private Client Services, which are two JPMS Global Wealth Management businesses.
From 9/07 to 2014, JPMS purportedly did not send letters to clients confirming modifications to their investment goals within 30 days of the changes. JPMS also allegedly did not collect and check the outside brokerage account statements of nearly 2,000 representatives from ’12 – ’13. Morgan Clearing Corp. is accused of, from ’11-’13, not sending out yearly privacy notices to hundreds of thousands of account holders at the broker-dealers where it provides clearing and custody.
Broker Banned by FINRA for Money Laundering
The Financial Industry Regulatory Authority said that it is barring James Van Doren. The broker was sentenced to 15 months behind bars for a money laundering scam.
According to FINRA, Van Doren took part in unethical behavior by helping to make it possible for a childhood friend and business associate to avoid certain legal duties. The former broker invested in a number of real estate deals with the friend’s company and helped conceal assets when the company couldn’t fulfill its duties.
He also accepted $244K from the friend to hide the assets that his creditors were looking for. He eventually returned most of the funds to the friend while keeping some for financial losses he sustained.
The SRO called Van Doren a “grave risk” to industry participants. Meantime, Van Doren claims he did nothing wrong and that he was coerced into pleading guilty. Van Doren also previously worked for Citigroup (C), Barclays (BARC), and Lehman Brothers Holdings.
Maine Broker Gets Three Years in Prison
A former broker was sentence to three years behind bars and will serve two years of probation for bilking one of his clients. Thomas E. Skypeck pleaded guilty to securities fraud, misuse of entrusted property, forgery, and theft in 2015. The U.S. Securities and Exchange Commission has barred him from the industry.
According to Maine officials, Skypeck worked for the client as a state-licensed broker-dealer agent and insurance producer, giving advice about retirement investments. He gave her misleading information about annuity contracts to persuade her to trade old policies for new policies. The client followed his advice, causing her to sustain unnecessary penalties and preventing her from accessing her funds. Meantime, Skypeck made a commission with every purchase the client made.
In one instance, he told her to take out nearly $60,000 from an annuity. The funds were used to purchase silver and gold coins, which she later sold, again following his advice. The money was used to purchase nearly $68,000 from precious metal dealer. He was paid a commission and she sustained a penalty for taking out the money. Skypeck also took one of the boxes of coins and kept it at his home, selling over $5,000 of them to cover his own spending.
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Former Citigroup rep ejected from industry, Bank Investment Consultant, April 25, 2016
J.P. Morgan broker-dealer and custodian fined $1 million, InvestmentNews, April 25, 2016
FINRA’s Action Against Van Doren (PDF)
Maine man sentenced for securities fraud, forgery, theft, Bangor Daily News, May 4, 2016