In re J.P. MORGAN SECURITIES

 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 99344 / January 16, 2024 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6530 / January 16, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21829 
 
 
In the Matter of 
 
J.P. MORGAN SECURITIES 
LLC  
 
Respondent. 
 
 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS 
PURSUANT TO SECTIONS 15(b) AND 21C 
OF THE SECURITIES EXCHANGE ACT 
OF 1934 AND SECTION 203(e) OF THE 
INVESTMENT ADVISERS ACT OF 1940, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER 
   
 
I. 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange 
Act”) and Section 203(e) of the Investment Advisers Act of 1940 (“Advisers Act”) against J.P. 
Morgan Securities LLC (“JPMS” or “Respondent”). 
II. 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over Respondent and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 
Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the 
Securities Exchange Act of 1934 and Section 203(e) of the Investment Advisers Act of 1940, 
Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 
set forth below. 

 2 
III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds that: 
Summary 
1. This matter relates to JPMS’s violations of the whistleblower protections afforded 
under Exchange Act Rule 21F-17(a). 
2. From 2020 through July 2023 (the “Relevant Period”), JPMS regularly asked certain 
advisory clients and brokerage customers (collectively and individually referred to as “clients” or 
“client”) to whom it had issued a credit or settlement over $1,000 in value to sign a confidential 
release agreement (“Release”) that impeded the clients from disclosing potential violations of the 
federal securities laws to the Commission unless responding to an inquiry from the Commission.  
Specifically, the Release required the clients to keep confidential not only the Release itself, but also 
all information relating in any way to the specified account at JPMS.  While the Release permitted 
clients to respond to inquiries from the Commission, it did not permit voluntary communications 
with the Commission concerning potential securities law violations.  These confidentiality 
provisions of the Release violated Rule 21F-17(a). 
 
Respondent 
3. JPMS is a Delaware limited liability company with its principal office in New York, 
New York, and is dually registered with the Commission as an investment adviser and broker-
dealer.  In its Form ADV dated March 30, 2023, JPMS reported that it had approximately $212.9 
billion in regulatory assets under management.  JPMS is a wholly owned subsidiary of JPMorgan 
Chase & Co., a global financial services firm incorporated in Delaware and headquartered in New 
York, New York. 
Facts 
Statutory and Regulatory Framework Protecting Whistleblowers 
4. The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank 
Act”), enacted on July 21, 2010, amended the Exchange Act by adding Section 21F-17, 
“Whistleblower Incentives and Protection.”  The purpose of these provisions was to encourage 
whistleblowers to report possible securities law violations by providing, among other things, 
financial incentives and confidentiality protections. 
5. To fulfill this Congressional purpose, the Commission adopted Rule 21F-17, which 
provides in relevant part: 
(a) No person may take any action to impede an individual from 
communicating directly with the Commission staff about a possible 
securities law violation, including enforcing, or threatening to enforce, a 
confidentiality agreement . . . with respect to such communications. 

 3 
Rule 21F-17 became effective on August 12, 2011. 
JPMS’s Confidential Release Agreement 
6. During the Relevant Period, in the ordinary course of its business, JPMS typically 
requested that certain clients sign a Release if the clients received a credit or settlement of over 
$1,000, regardless of whether JPMS admitted or denied any error or wrongdoing in connection with 
the credit or settlement.  In addition, JPMS sometimes offered its clients an additional payment  
above and beyond the credit or payment calculated for the dispute.  In at least one case, this 
payment or credit was higher than the original credit or settlement.  Since 2020, at least 362 JPMS 
clients have signed a Release, receiving an amount ranging from approximately $1,000 to $165,000.   
7. The Release used by JPMS from March 2020 through July 2023 contained language 
providing a release of liability and a provision that stated, “the [JPMS client] promises not to sue or 
solicit others to institute any action or proceeding against [JPMS] arising out of events concerning 
the Account” and that if the JPMS client breaches that provision, JPMS “may undertake whatever 
legal action they deem appropriate to address the breach(s), including, but not limited to, injunctive 
relief, and monetary damages not to exceed the settlement amount.”   
8. In a separate paragraph, the Release stated: 
“[the JPMS client] shall keep this Agreement confidential and not use or disclose 
(including but not limited to, media statements, social media, or otherwise) the 
allegations, facts, contentions, liability, damages, or other information relating in any 
way to the Account, including but not limited to, the existence or terms of this 
Agreement . . . . Notwithstanding, [JPMS client] and [JPMS client’s] attorneys are 
neither prohibited nor restricted from responding to any inquiry about this settlement 
or its underlying facts by FINRA, the SEC, or any other government entity or self-
regulatory organization, or as required by law.”    
Notwithstanding this statement, the terms of the Release prohibited clients from 
affirmatively reporting to the Commission staff in violation of Rule 21F-17(a), which is intended to 
“encourag[e] individuals to report to the Commission.”  Securities Whistleblower Incentives and 
Protections Adopting Release, Release No. 34-63434 (June 13, 2011). 
9. In some cases, despite requiring a client to sign a Release prohibiting the client 
from reporting the underlying dispute to the Commission, JPMS separately reported the dispute to 
the Financial Industry Regulatory Authority (“FINRA”), as required by FINRA Rule 4530.  This 
reporting to FINRA does not in any way mitigate the language in the Release that impeded clients 
from reporting potential securities law violations to the Commission. 

 4 
Violations 
10. As a result of the conduct described above, JPMS willfully
1
 violated Exchange Act 
Rule 21F-17(a), which prohibits any person from taking any action to impede an individual from 
communicating directly with the Commission staff about a possible securities law violation. 
Respondent’s Remedial Actions 
11. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Respondent. 
12. After Commission staff informed Respondent that the Release violated Rule 21F-
17(a), JPMS revised the section of the Release described above in paragraph 8 to add language 
affirmatively advising clients that they are not prohibited from disclosing information to any 
governmental or regulatory authority.   
13. JPMS also sent communications to clients who received the Release stating that 
they are not prohibited from voluntarily or otherwise communicating directly with or providing 
information to any governmental or regulatory authority about their accounts, the Release, any 
underlying facts or circumstances, or disputes or concerns.   
IV. 
 In view of the foregoing, the Commission deems it appropriate, in the public interest, to 
impose the sanctions agreed to in Respondent’s Offer. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act and Section 203(e) of 
the Advisers Act, it is hereby ORDERED that: 
 
 A. JPMS cease and desist from committing or causing any violations and any future 
violations of Exchange Act Rule 21F-17(a).  
 
B. JPMS is censured. 
 
C. JPMS shall, within twenty-one (21) days of the entry of this Order, pay a civil 
money penalty in the amount of $18 million to the Securities and Exchange Commission for 
transfer to the general fund of the United States Treasury, subject to Exchange Act Section 
 
1
  “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act and Section 
15(b) of the Exchange Act, “‘means no more than that the person charged with the duty knows what he is 
doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 
977 (D.C. Cir. 1949)).  There is no requirement that the actor “also be aware that he is violating one of the 
Rules or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). The decision in The Robare Group, Ltd. v. 
SEC, which construed the term “willfully” for purposes of a differently structured statutory provision, 
does not alter that standard. 922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the showing required to 
establish that a person has “willfully omit[ted]” material information from a required disclosure in 
violation of Section 207 of the Advisers Act). 

 5 
21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 
3717. 
 
Payment must be made in one of the following ways: 
 
(1) Respondent may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request; 
 
(2)  Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 
 
(2) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to: 
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
JPMS as a respondent in these proceedings, and the file number of these proceedings; a copy of 
the cover letter and check or money order must be sent to Virginia Rosado Desilets, Assistant 
Director, Securities and Exchange Commission, Division of Enforcement, 100 F Street, N.E., 
Washington, DC 20549-5010A. 
 
D.   Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes. To 
preserve the deterrent effect of the civil penalty, JPMS agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of JPMS’s payment of a civil penalty 
in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, JPMS agrees that it shall, within 30 days after entry of a final order granting the 
Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty 
Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed an 
additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a  
private damages action brought against JPMS by or on behalf of one or more investors based on  
  

 6 
substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
        Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 99344 / January 16, 2024 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6530 / January 16, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-21829 

 

 

In the Matter of 

 

J.P. MORGAN SECURITIES 

LLC  

 

Respondent. 

 

 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS 

PURSUANT TO SECTIONS 15(b) AND 21C 

OF THE SECURITIES EXCHANGE ACT 

OF 1934 AND SECTION 203(e) OF THE 

INVESTMENT ADVISERS ACT OF 1940, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER 

   

 

I. 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange 

Act”) and Section 203(e) of the Investment Advisers Act of 1940 (“Advisers Act”) against J.P. 

Morgan Securities LLC (“JPMS” or “Respondent”). 

II. 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over Respondent and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 

Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the 

Securities Exchange Act of 1934 and Section 203(e) of the Investment Advisers Act of 1940, 

Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 

set forth below. 



 2 

III. 

 On the basis of this Order and Respondent’s Offer, the Commission finds that: 

Summary 

1. This matter relates to JPMS’s violations of the whistleblower protections afforded 

under Exchange Act Rule 21F-17(a). 

2. From 2020 through July 2023 (the “Relevant Period”), JPMS regularly asked certain 

advisory clients and brokerage customers (collectively and individually referred to as “clients” or 

“client”) to whom it had issued a credit or settlement over $1,000 in value to sign a confidential 

release agreement (“Release”) that impeded the clients from disclosing potential violations of the 

federal securities laws to the Commission unless responding to an inquiry from the Commission.  

Specifically, the Release required the clients to keep confidential not only the Release itself, but also 

all information relating in any way to the specified account at JPMS.  While the Release permitted 

clients to respond to inquiries from the Commission, it did not permit voluntary communications 

with the Commission concerning potential securities law violations.  These confidentiality 

provisions of the Release violated Rule 21F-17(a). 

 

Respondent 

3. JPMS is a Delaware limited liability company with its principal office in New York, 

New York, and is dually registered with the Commission as an investment adviser and broker-

dealer.  In its Form ADV dated March 30, 2023, JPMS reported that it had approximately $212.9 

billion in regulatory assets under management.  JPMS is a wholly owned subsidiary of JPMorgan 

Chase & Co., a global financial services firm incorporated in Delaware and headquartered in New 

York, New York. 

Facts 

Statutory and Regulatory Framework Protecting Whistleblowers 

4. The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank 

Act”), enacted on July 21, 2010, amended the Exchange Act by adding Section 21F-17, 

“Whistleblower Incentives and Protection.”  The purpose of these provisions was to encourage 

whistleblowers to report possible securities law violations by providing, among other things, 

financial incentives and confidentiality protections. 

5. To fulfill this Congressional purpose, the Commission adopted Rule 21F-17, which 

provides in relevant part: 

(a) No person may take any action to impede an individual from 

communicating directly with the Commission staff about a possible 

securities law violation, including enforcing, or threatening to enforce, a 

confidentiality agreement . . . with respect to such communications. 



 3 

Rule 21F-17 became effective on August 12, 2011. 

JPMS’s Confidential Release Agreement 

6. During the Relevant Period, in the ordinary course of its business, JPMS typically 

requested that certain clients sign a Release if the clients received a credit or settlement of over 

$1,000, regardless of whether JPMS admitted or denied any error or wrongdoing in connection with 

the credit or settlement.  In addition, JPMS sometimes offered its clients an additional payment  

above and beyond the credit or payment calculated for the dispute.  In at least one case, this 

payment or credit was higher than the original credit or settlement.  Since 2020, at least 362 JPMS 

clients have signed a Release, receiving an amount ranging from approximately $1,000 to $165,000.   

7. The Release used by JPMS from March 2020 through July 2023 contained language 

providing a release of liability and a provision that stated, “the [JPMS client] promises not to sue or 

solicit others to institute any action or proceeding against [JPMS] arising out of events concerning 

the Account” and that if the JPMS client breaches that provision, JPMS “may undertake whatever 

legal action they deem appropriate to address the breach(s), including, but not limited to, injunctive 

relief, and monetary damages not to exceed the settlement amount.”   

8. In a separate paragraph, the Release stated: 

“[the JPMS client] shall keep this Agreement confidential and not use or disclose 

(including but not limited to, media statements, social media, or otherwise) the 

allegations, facts, contentions, liability, damages, or other information relating in any 

way to the Account, including but not limited to, the existence or terms of this 

Agreement . . . . Notwithstanding, [JPMS client] and [JPMS client’s] attorneys are 

neither prohibited nor restricted from responding to any inquiry about this settlement 

or its underlying facts by FINRA, the SEC, or any other government entity or self-

regulatory organization, or as required by law.”    

Notwithstanding this statement, the terms of the Release prohibited clients from 

affirmatively reporting to the Commission staff in violation of Rule 21F-17(a), which is intended to 

“encourag[e] individuals to report to the Commission.”  Securities Whistleblower Incentives and 

Protections Adopting Release, Release No. 34-63434 (June 13, 2011). 

9. In some cases, despite requiring a client to sign a Release prohibiting the client 

from reporting the underlying dispute to the Commission, JPMS separately reported the dispute to 

the Financial Industry Regulatory Authority (“FINRA”), as required by FINRA Rule 4530.  This 

reporting to FINRA does not in any way mitigate the language in the Release that impeded clients 

from reporting potential securities law violations to the Commission. 



 4 

Violations 

10. As a result of the conduct described above, JPMS willfully1 violated Exchange Act 

Rule 21F-17(a), which prohibits any person from taking any action to impede an individual from 

communicating directly with the Commission staff about a possible securities law violation. 

Respondent’s Remedial Actions 

11. In determining to accept the Offer, the Commission considered remedial acts 

promptly undertaken by Respondent. 

12. After Commission staff informed Respondent that the Release violated Rule 21F-

17(a), JPMS revised the section of the Release described above in paragraph 8 to add language 

affirmatively advising clients that they are not prohibited from disclosing information to any 

governmental or regulatory authority.   

13. JPMS also sent communications to clients who received the Release stating that 

they are not prohibited from voluntarily or otherwise communicating directly with or providing 

information to any governmental or regulatory authority about their accounts, the Release, any 

underlying facts or circumstances, or disputes or concerns.   

IV. 

 In view of the foregoing, the Commission deems it appropriate, in the public interest, to 

impose the sanctions agreed to in Respondent’s Offer. 

 

 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act and Section 203(e) of 

the Advisers Act, it is hereby ORDERED that: 

 

 A. JPMS cease and desist from committing or causing any violations and any future 

violations of Exchange Act Rule 21F-17(a).  

 

B. JPMS is censured. 

 

C. JPMS shall, within twenty-one (21) days of the entry of this Order, pay a civil 

money penalty in the amount of $18 million to the Securities and Exchange Commission for 

transfer to the general fund of the United States Treasury, subject to Exchange Act Section 

 
1  “Willfully,” for purposes of imposing relief under Section 203(e) of the Advisers Act and Section 

15(b) of the Exchange Act, “‘means no more than that the person charged with the duty knows what he is 

doing.’” Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 

977 (D.C. Cir. 1949)).  There is no requirement that the actor “also be aware that he is violating one of the 

Rules or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). The decision in The Robare Group, Ltd. v. 

SEC, which construed the term “willfully” for purposes of a differently structured statutory provision, 

does not alter that standard. 922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the showing required to 

establish that a person has “willfully omit[ted]” material information from a required disclosure in 

violation of Section 207 of the Advisers Act). 



 5 

21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 

3717. 

 

Payment must be made in one of the following ways: 

 

(1) Respondent may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 

request; 

 

(2)  Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

 

(2) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to: 

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

JPMS as a respondent in these proceedings, and the file number of these proceedings; a copy of 

the cover letter and check or money order must be sent to Virginia Rosado Desilets, Assistant 

Director, Securities and Exchange Commission, Division of Enforcement, 100 F Street, N.E., 

Washington, DC 20549-5010A. 

 

D.   Amounts ordered to be paid as civil money penalties pursuant to this Order shall 

be treated as penalties paid to the government for all purposes, including all tax purposes. To 

preserve the deterrent effect of the civil penalty, JPMS agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of JPMS’s payment of a civil penalty 

in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, JPMS agrees that it shall, within 30 days after entry of a final order granting the 

Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty 

Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed an 

additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a  

private damages action brought against JPMS by or on behalf of one or more investors based on  

  



 6 

substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

        Secretary