Monetary Authority of Singapore imposes $2.4 million civil penalty on JPMorgan Chase Bank, NA for misconduct by its relationship managers

The Monetary Authority of Singapore (MAS) has fined JP Morgan Chase $2.4 million for charges relating to over-the-counter (OTC) bond transactions, in which the bank’s relationship managers bank provided inaccurate or incomplete information to customers, which led to charges against them. spreads higher than the bilaterally agreed rates.

JPM’s practice consisted of charging clients a spread on interbank prices

The Singapore regulator accused JP Morgan of failing to prevent and detect misconduct by its relationship managers.

According to the financial watchdog, this enforcement action against JPM follows MAS’s review of pricing and disclosure practices in the private banking sector. Investigations revealed that for over-the-counter bond transactions, JPM’s practice was to charge clients a spread on interbank prices.

As interbank prices were not available to customers, they had to rely on RMs’ representations regarding interbank prices and spreads, MAS said.

MAS further said that JPM did not have adequate processes and controls in place to ensure that its RMs adhered to previously agreed spreads with clients when executing over-the-counter bond transactions on their behalf.

A sample of 24 over-the-counter bond transactions conducted by JPM’s RMs found that RMs had either misrepresented price components or omitted material information that the spreads charged were higher than the agreed rates, in violation of Sections 201 (c) and 201(d) of the Securities. and Futures Contracts Act (SFA).

JPM admitted liability under section 236C of the SFA for its failure to prevent or detect the misconduct of its RMs and paid MAS the civil penalty. The bank reimbursed the overcharged fees to the customers concerned. The bank has also improved its pricing frameworks and internal controls to avoid recurrence of such misconduct. Separate reviews of the various NCMs involved in the misconduct are underway.