JPMorgan Chase & Co. is facing allegations it inappropriately steered clients into proprietary and underperforming funds and other investments.
A lawsuit filed this week by leaders of the Christ Church Cathedral in Indianapolis comes after several news reports, citing anonymous sources, said the Securities and Exchange Commission
is investigating the bank's subsidiaries for possible conflicts of interest in its mutual fund sales.
The church's 50-page complaint, filed Wednesday in the U.S. District Court in Indianapolis, alleges the New York-based bank caused the church's trusts to lose some $13 million in value because of JPMorgan's decision to purchase 177 investment products “because they produced the highest revenues to JPMorgan, to the detriment of Christ Church.” The complaint said the proprietary products comprised between 68% and 85% of the Church's investment portfolio.
A spokeswoman for New York-based JPMorgan, Kristen Chambers, declined to comment. A spokeswoman for the SEC, Judith A. Burns, also declined to comment.
The church, founded in 1837 and a beneficiary of the family fortune of the pharmaceutical giant Eli Lilly & Co., was a client of JPMorgan and its Private Wealth Management division.
The products purchased on behalf of the church included private equity and hedge funds, managed accounts, cash sweep accounts and mutual funds “so heavily burdened with expenses and fees that they were doomed to fail to perform” between 2004 and 2013, according to the complaint.
The church's assets declined to $31.6 million in 2013 from $39.2 million before 2008, the complaint said, pointing to millions earned by the firm for cross-selling investment products.
