The Monetary Authority of Singapore (MAS) has levied a civil penalty of S$2.4 million (US$1.78 million) against JPMorgan Chase Bank for failing to prevent misconduct by its relationship managers. This fine comes after a review of the banking sector’s pricing and disclosure practices, exposing significant lapses in the bank’s internal controls.
Details of the Misconduct
According to MAS, the bank’s relationship managers provided clients with inaccurate or incomplete disclosures in 24 instances involving over-the-counter (OTC) bond transactions. These transactions took place between November 2018 and September 2019.
- Clients were charged spreads above the bilaterally agreed rates.
- JPMorgan’s practices did not allow clients access to interbank prices.
- Relationship managers misrepresented the charged spreads or omitted that the spreads exceeded agreed rates.
Bank’s Response
JPMorgan Chase has admitted liability for the misconduct and promptly paid the fine, in addition to refunding the overcharged fees to affected clients. In response to the ruling, the bank has enhanced its pricing frameworks and internal controls to avert future issues.
“This represents a very small portion of the total trades processed during the related period,” JPMorgan stated, highlighting that proactive steps were taken to tighten its internal review and compliance practices in 2020.
Future Implications
MAS continues to investigate the actions of the individual relationship managers involved in this case. The regulator’s civil penalty regime—established to complement criminal sanctions—aims to tackle market misconduct more effectively.
As Singapore increasingly positions itself as a global financial hub, such regulatory actions serve as a reminder to all institutions about the importance of compliance and ethical trading practices.