SEC Fines JPMorgan For Mistakenly Deleting 47 Mln Records

(RTTNews) - The Securities and Exchange Commission fined JPMorgan Chase of $4 million for accidently deleting about 47 million electronic records which were requested by subpoenas in several investigations.

As per the SEC order against J. P. Morgan Securities LLC, the banking major's broker-dealer unit, it was accused that the bank failed to preserve electronic records as required. Millions of emails and instant messages from January 2018 to April 2018 were permanently deleted in June 2019, while troubleshooting an issue. Broker-dealers are required to retain the originals of all communications for at least three years.

These millions of communications were housed in around 8,700 electronic mailboxes, including the email boxes of as many as 7,500 employees who had regular contact with Chase customers. Many of which were business records required to be retained, it noted.

As the records got deleted, the company failed to come up with requested documents in at least twelve civil securities-related regulatory investigations. These included eight SEC investigations and four other regulatory probes.

JPMorgan reported the deletion event to the Commission in January 2020.

"Because the deleted records are unrecoverable, it is unknown - and unknowable - how the lost records may have affected the regulatory investigations. Indeed, a member of JPMorgan's compliance department acknowledged in an internal email after the deletion event was discovered that lost documents could relate to potential future investigations, legal matters and regulatory inquiries.", the order said.

For the settlement of the issues, JPMorgan had submitted an offer, which was accepted by the regulator.

The SEC ordered the company to cease and desist from committing or causing any violations and any future violations of the securities law. JPMorgan is also censured, and the bank is asked to pay the penalty money within 14 days of the entry of the order.

In previous incidents, JPMorgan paid $700,000 in penalties in 2005 for not preserving electronic records from mid-1999 to mid-2002.

In late 2021, the company agreed to pay $125 million in penalties for failing to preserve electronic communications sent between January 2018 and November 2020.