An SEC investigation found that the firm’s investment advisory business JP Morgan Securities and JP Morgan Chase Bank “preferred to invest clients in the firm’s own proprietary investment products without properly disclosing this preference,” the US authority said in a statement last week. “This preference impacted two fundamental aspects of money management – asset allocation and the selection of fund managers – and deprived JP Morgan’s clients of information they needed to make fully informed investment decisions."

In a parallel action, JP Morgan Chase Bank agreed to pay an additional $40 million penalty to the US Commodity Futures Trading Commission, the SEC said.

“In addition to proprietary product conflicts, JPMS breached its fiduciary duty to certain clients when it did not inform them that they were being invested in a more expensive share class of proprietary mutual funds, and JPMCB did not disclose that it preferred third-party-managed hedge funds that made payments to a JP Morgan affiliate,” said JulieRiewe, co-chief of the SEC enforcement division’s asset management unit. 

The SEC’s order also found that JPMCB failed to disclose several conflicts of interest to certain high net worth and ultra high net worth clients of its US private bank and certain clients of Chase Private Client, who invested in JP Morgan Investment Portfolio, a discretionary managed account program.

“JPMS agreed to be censured, and both subsidiaries agreed to cease and desist from further violations,” the SEC said.

Family Wealth Report contacted JP Morgan about the matter but had not heard back at the time of publication.