NEWARK – The New Jersey Division of Consumer Affairs and the Bureau of Securities today announced a settlement with J.P. Morgan Securities, LLC, resolving violations that resulted from allowing unregistered agents to accept orders for the purchase and sale of securities in New Jersey.
“Investors expect, demand, and deserve full compliance with the law when they entrust their money to an investment firm,” Acting Attorney General John J. Hoffman said. “J.P. Morgan fell short when it failed to ensure compliance with New Jersey’s registration requirements when dealing with New Jersey investors.”
From 2004 through 2011, J.P. Morgan employed certain sales assistants who accepted orders from New Jersey investors, even though these sales assistants were not registered with the Bureau of Securities. Such conduct is prohibited by New Jersey’s Uniform Securities Law. This practice extended to other U.S. states and territories in which client orders were accepted by sales assistants not registered in those jurisdictions.
In addition, J.P. Morgan failed to maintain records identifying employees who accepted orders from investors in New Jersey and other jurisdictions, also in violation of the Uniform Securities Law.
At least one business unit at J.P. Morgan required its sales assistants to be registered in all 50 states. However, other units required sales assistants to be registered only in the same states as the agents they supported, or endeavored to register sales assistants in the same states as the agents they supported. In these units, there were multiple instances in which certain sales assistants accepted unsolicited orders for the purchase and sale of securities without proper registration in New Jersey.
These violations were uncovered through a multi-state investigation coordinated by the North American Securities Administrators Association (NASAA) in which the New Jersey Bureau of Securities participated. The State of New Jersey will receive $50,460 in civil monetary penalties from J.P. Morgan.
In response to the investigation and settlement, J.P. Morgan has made changes to its registration policies, supervisory procedures, and order entry systems to prevent the purchase and sale of securities by unregistered agents.
The Bureau of Securities can assist investors in determining whether those selling securities, as well as securities offered for sale, are registered or are exempt from registration. The Bureau can be contacted toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600. The Bureau’s website is www.njcsecurities.gov.
Investigator Peter C. Cole conducted this investigation on behalf of the Bureau.
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