JPMorgan subsidiary faces SEC fine of $4 million over deletion of 47 million emails, some related to subpoenas, resulting in a lack of crucial communications for regulators in multiple investigations. The Securities and Exchange Commission (SEC) alleged that from January 2018 to April 2018, JPMorgan Securities mistakenly and permanently deleted around 47 million electronic records. This action prevented the bank from providing requested documents for eight SEC investigations and four other regulatory probes. The SEC did not disclose whether these investigations specifically targeted the bank. In response to the allegations, JPMorgan chose not to comment or dispute them.
In 2021, JPMorgan resolved accusations of violating regulations by failing to retain business communications on platforms like WhatsApp, resulting in a $125 million payment to the SEC and a $75 million payment to the Commodity Futures Trading Commission. Subsequently, other banks also faced penalties for similar conduct in the following year.
According to the SEC, brokerages like JPMorgan Securities are obligated to retain records of their business communications for at least three years. In the recent settlement, the SEC claimed that the firm unintentionally deleted a significant number of communications from the first quarter of 2018 while attempting to address technical issues. The SEC further alleged that the vendor responsible for archiving JPMorgan's records had failed to safeguard the emails sent to the "Chase" communications domain, resulting in their deletion. This deletion affected the email inboxes of approximately 7,500 employees who regularly interacted with Chase customers.
A substantial portion of the deleted emails constituted "business records required to be retained pursuant" to federal securities law. J.P. Morgan Securities agreed to the SEC's $4 million penalty and received a censure from the regulatory body. The deleted emails included various types of communications, such as older emails, instant messages, and exchanges conducted through the Bloomberg terminal service.
However, the order revealed that there were "glitches" in the deletion project, and the identified documents were not actually expunged.
