SEC alleges JPMorgan wrongly deleted 47M emails during probes.

SEC Fines JPMorgan Chase $4 Million for Deleting Communications

The U.S. Securities and Exchange Commission (SEC) has imposed a $4 million fine on JPMorgan Chase after the multinational financial service allegedly deleted approximately 47 million communications during civil securities-related investigations.

The commission alleges that JPMorgan Securities deleted millions of emails and instant messages in 2019 that were dated between January and April of 2018. According to the settlement order, these 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.

Unknowable Consequences

“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 have also ordered JPMorgan to “cease and desist from committing any future violations.”

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The order states that 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, has 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, this is the third time the financial adviser has 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 this 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 that 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 also facing a similar lawsuit in the Virgin Islands, where it is 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.

Leif Le Mahieu contributed to this report.