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JPMorgan Settles Charges It Used Messaging to Skirt Records Rules

The SEC charged that JPMorgan used messaging services out of the purview of record-keepers to conduct business.
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JPMorgan Chase  (JPM) - Get JPMorgan Chase & Co. Report will pay $125 million to settle a charge from the Securities and Exchange Commission that the financial-services giant allowed employees to use WhatsApp and other messaging platforms to get around federal record-keeping rules.

In a related action, JPMorgan Chase, New York, said it would pay $75 million to the Commodity Futures Trading Commission to settle that agency's case

The SEC said on Friday that as part of the settlement, JPMorgan Securities admitted to "widespread record-keeping failures." 

"Books-and-records obligations help the SEC conduct its important examinations and enforcement work. They build trust in our system," SEC Chairman Gary Gensler said.

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"Ultimately, everybody should play by the same rules, and today’s charges signal that we will continue to hold market participants accountable for violating our time-tested recordkeeping requirements."

JPMorgan admitted that from at least January 2018 to November 2020 its employees communicated about securities business matters on their personal devices, using text messages, Meta Platforms'  (FB) - Get Meta Platforms Inc. Class A Report WhatsApp -- which has encrypted messaging -- and personal email accounts. 

None of those communications were archived by JPMorgan as required by law. The firm also admitted that the issue was companywide and that the practice was done openly.

JPMorgan received subpoenas for documents and voluntary requests from the SEC during "numerous investigations" during the period when the practice was ongoing. 

"As a result of the findings in this investigation, the SEC has commenced additional investigations of record preservation practices at financial firms," the agency added.