U.S. Securities and Exchange Commission (SEC) officials on Thursday slapped a $4 million fine against JPMorgan Chase after the multinational financial service allegedly deleted approximately 47 million communications amid a dozen civil securities-related investigations.
The commission alleged that JPMorgan Securities deleted millions of emails and instant messages in 2019 that were dated between January to April of 2018. According to the settlement order, the messages were deleted from about 8,700 mailboxes belonging to as many as 7,500 employees who had regular contact with Chase customers.
Many of the deleted emails included business records sought in at least a dozen regulatory investigations that the largest U.S. bank was required to retain for three years under the commission’s rules.
“Because the deleted records are unrecoverable, it is unknown – and unknowable – how the lost records may have affected the regulatory investigations,” the commission said in the order. “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.”
Officials also ordered JPMorgan to “cease and desist from committing any future violations.”
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The order stated JPMorgan initiated a project in 2016 “to delete from its system older communications and documents no longer required to be retained,” which included aged emails, instant messages, and communications transmitted to Bloomberg terminal services. However, the project experienced “glitches . . . with the identified documents not, in fact, being expunged.”
“In June 2019, while troubleshooting the issue, firm employees executed deletion tasks on electronic communications from the first quarter of 2018, erroneously believing, based on written representations from JPMorgan’s archiving vendor, that all the documents were coded in a way to prevent permanent deletion of records still within the thirty-six month regulatory retention period,” the order continued.
“The eComm Tech team and the vendor investigated the issue, and learned that electronic communications in the Chase domain which had been the target of the troubleshooting tasks had not, in fact, been properly coded by the vendor with the thirty-six month default retention and actually had been deleted,” the order said.
JPMorgan, which is based in New York, agreed to the commission’s sanction but did not admit or deny the allegations to media outlets.
“JPMorgan takes its record-keeping obligations seriously,” the bank said in a statement, according to Reuters.
According to reports, the latest punishment marks the third time the financial adviser failed to preserve electronic records. In 2021, JPMorgan officials agreed to pay $125 million in penalties for losing text messages and other electronic communications sent between January 2018 and November 2020. In 2005 the banking firm paid $700,000 in penalties after failing to preserve electronic records from 1999 to 2002.
Earlier his month, JPMorgan Chase agreed to settle with victims of Jeffrey Epstein’s sex trafficking operation for $290 million, according to a tentative agreement.
The victims had alleged the bank allowed Epstein, a wealthy financier and convicted pedophile who died in a New York City jail cell in 2019, to facilitate his sex trafficking operation through his accounts and connections at the bank. The precise number of victims involved in the suit remains unclear.
The bank did not admit any wrongdoing in connection to Epstein, and CEO Jamie Dimon has testified that the bank was in the dark about Epstein’s misdeeds.
JPMorgan is facing a similar lawsuit in the Virgin Islands, where it is also under fire over its relationship with Epstein. That trial is set to begin in October.
Previously, Deutsche Bank, another bank accused of ambivalence to Epstein’s sex trafficking operation, settled with several individuals who said they were victims of Epstein’s crimes and other women for $75 million.
JPMorgan Chase added in its Monday statement that it regretted any association with Epstein.
“Any association with him was a mistake and we regret it. We would never have continued to do business with him if we believed he was using our bank in any way to help commit heinous crimes,” the bank said.
Leif Le Mahieu contributed to this report.