The
Financial Industry Regulatory Authority has fined J.P. Morgan Securities $1.25 million for failing to conduct timely or adequate background checks on approximately 8,600, or 95%, of its non-registered personnel.
The lapse in oversight occurred from January 2009 through May 2017, Finra said in a release.
Finra said securities laws require broker-dealers to fingerprint certain employees working in a non-registered capacity who may present a risk to customers based on their positions. Fingerprinting helps firms identify if a person has been convicted of crimes that would disqualify them from being associated with a firm. Federal banking laws require banks to conduct similar checks on banking employees.
The industry's self-regulator found that for more than eight years,
J.P. Morgan Securities did not fingerprint approximately 2,000 of its non-registered associated persons in a timely manner, preventing the firm from determining whether those employees might be disqualified from working at the firm.
In addition, the firm fingerprinted other non-registered associated personnel but limited its screening to criminal convictions specified in federal banking laws and an internally created list. As a result, the firm did not appropriately screen 8,600 individuals for all felony convictions or for disciplinary actions by financial regulators, Finra said.
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The self-regulator said it found that four individuals who were subject to a statutory disqualification because of a criminal conviction were allowed to associate, or remain associated, with the firm during the relevant time period. One of the four individuals was associated with the firm for 10 years; and another for eight years.
J.P. Morgan neither admitted nor denied the allegations, but consented to Finra's findings.
