JPMorgan Expands Disclosures for Private-Banking Clients

According to The Wall Street Journal, J.P. Morgan Chase (JPM) is now articulating more clearly the difference between outside products and its own offerings to private-banking clients, as well as letting them know how much of their monies have gone to each. These more detailed explanations come, say the newspaper’s sources, in the wake of recent questioning by regulators on whether the firm was pushing its own products over others.
The Office of the Comptroller of the Currency and the U.S. Securities Exchange Commission has been monitoring whether brokers are selling the products that are right for a client or directing a customer to the ones that would make a broker-dealer the most money.

Individuals that belong to J.P. Morgan’s private-banking division have at least $10 million in investible assets, reports The Wall Street Journal. The firm has been criticized before for favoring its own funds. It even paid $384 million to American Century Investments in an arbitration case a few years ago for promoting J.P. Morgan funds over the latter’s funds.

In this current probe by the OCC, no formal complaint was made and the regulator did not insist on any changes. J.P. Morgan chose to expand its disclosures of its own accord.

The current wealth-management mode has drawn some criticism by those who worry that giving employees incentive to sell the firm’s own products would inevitably compel them to push these offerings to garner more money for a brokerage firm and the broker. Currently, brokers do not have a duty to only recommend products that are in the clients’ best interests. However, the U.S. Labor Department and the SEC are considering putting fiduciary standards into place for this.

The SSEK Partners Group represents high-net worth individuals and institutional investors in getting their securities fraud losses back.

J.P. Morgan Questioned for Conflicts of Interest, The Wall Street Journal, July 27, 2014

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