J.P. Morgan has agreed to pay the Securities and Exchange Commission $18 million to settle allegations that it violated whistleblower protection law, the agency said Tuesday.
The SEC says that between 2020 and 2023, the investment firm asked retail clients who were issued credits or settlements of more than $1,000 to sign agreements that restricted them from voluntarily contacting the agency, in violation of the Securities and Exchange Act.
“Whether it’s in your employment contracts, settlement agreements or elsewhere, you simply cannot include provisions that prevent individuals from contacting the SEC with evidence of wrongdoing,” Gurbir S. Grewal, the director of the SEC’s Division of Enforcement, said in a statement. “But that’s exactly what we allege J.P. Morgan did here. For several years, it forced certain clients into the untenable position of choosing between receiving settlements or credits from the firm and reporting potential securities law violations to the SEC. This either-or proposition not only undermined critical investor protections and placed investors at risk, but was also illegal.”
This is a developing story and will be updated.