J.P. Morgan Securities Fined $250,000 by FINRA Over Margin Disclosure Failures | LeapRate
J.P. Morgan Securities LLC (JPMS) has agreed to a censure and a $250,000 fine from the Financial Industry Regulatory Authority (FINRA) after the firm admitted to longstanding failures in its margin account disclosures, according to a Letter of Acceptance, Waiver, and Consent (AWC) published by the regulator.
According to the AWC, a technology change in October 2010 caused certain margin credit information to be inadvertently omitted from account statements sent to customers who carried margin debit balances.
The missing details included the annual interest rate charged, the account balance at the end of the interest period, and, where applicable, average debit balances tied to each interest rate, all of which are required under Rule 10b-16(a)(2) of the Securities Exchange Act of 1934.
FINRA found that between October 2010 and February 2024, JPMS failed to include this required information on 56,254 account statements affecting 4,463 customer accounts, though the dollar amount of margin interest charged was consistently disclosed.
The regulator also determined that JPMS lacked an adequate supervisory system and written procedures to ensure compliance with the rule for roughly 14 years, a lapse that persisted until the firm introduced corrective measures in September 2024.
The case originated from JPMS’s own self-disclosure to FINRA in March 2024 under Rule 4530. FINRA noted this voluntary reporting, along with the firm’s prompt remediation efforts, as mitigating factors when determining sanctions.
JPMS settled the matter without admitting or denying FINRA’s findings, consenting to the censure and fine as part of the standard AWC process.
