JP Morgan was ordered to pay a $4 million civil monetary penalty by the US Securities and Exchange Commission (SEC) on Thursday following the watchdog’s findings that it had mistakenly deleted 47 million emails.
According to the SEC’s order, in June 2019, JP Morgan employees “erroneously” deleted electronic communications – some 47 million emails – from the first quarter of 2018, believing that the documents were coded in a way to prevent permanent deletion due to written communications from the bank’s archiving third party vendor. Until October 2019, no one at the bank knew the electronic communications from the period had been deleted following the task.
The bank reported the deletion event to the SEC in January 2020.
The records were requested as part of at least 12 regulatory investigations, however could not be retrieved because they had been deleted permanently, the SEC said.
In response to the event, JPMorgan has implemented proprietary thirty-six month retention coding and the bank’s eComm tech team updated its procedures to prohibit other deletion tasks from being run on electronic communications “within a period still subject to regulatory retention requirements”. The new procedures also require that any employee seeking to run a deletion task must first obtain approval from a senior-level information officer.
“JP Morgan takes its record keeping obligations seriously,” a spokesperson for the bank said. “We have taken steps to enhance our process and procedures.”
Thursday’s order follows two other similar previous orders issued by the SEC to JP Morgan for failure to preserve records. These include one relating to a period between January 2018 and November 2020 that resulted in $125 million in penalties, and one relating to the period between July 1999 and June 2002 which resulted in $700,000 in penalties to be paid to the SEC, FINRA and the New York Stock Exchange.
Read more – Record fines in 2022 as regulators crack down
Communication remains central to many of the recent orders issued by regulators to Wall Street banks.
The SEC issued a record $6.4 billion in penalties last year across 760 penalty actions – a 9% increase on the previous year, including fines totaling $1.1 billion across 16 Wall Street players for failing to monitor or prevent their workers from using unauthorized messaging apps such as WhatsApp.
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Author: Annabel Smith
FINRA News and Information compiled by Costello Law Group. See source for full story.