JPMorgan disclosed this week in a quarterly filing with the Securities and Exchange Commission that it is under several investigations concerning a wide variety of claims, including violations of the Foreign Corrupt Practices Act, foreign exchange sales, LIBOR manipulation, and much more.
“Investigations involve both formal and informal proceedings by both governmental agencies and self-regulatory organizations,” the Form 10-Q stated. “These legal proceedings are at varying stages of adjudication, arbitration or investigation, and involve each of the firm’s lines of business and geographies and a wide variety of claims (including common law tort and contract claims and statutory antitrust, securities, and consumer protection claims).”
Below is a list of investigations, as described by the bank.
Referral hiring practices investigations. Various regulators are investigating, among other things, the firm’s compliance with the FCPA and other laws with respect to the firm’s hiring practices related to candidates referred by clients, potential clients, government officials, and its engagement of consultants in the Asia Pacific region. The bank said it is responding to and cooperating with these investigations.
Custody Assets investigation. The U.K. Financial Conduct Authority (FCA) is conducting an investigation concerning compliance by JPMorgan Chase Bank’s London branch and J.P. Morgan Europe Limited with the FCA’s rules “regarding the provision of custody services relating to the administration of client assets. JPMorgan Chase Bank, N.A., London branch and JP Morgan Europe Limited are responding to and cooperating with the investigation.”
Foreign Exchange investigations. JP Morgan previously reported settlements with certain government authorities relating to its foreign exchange (“FX”) sales and trading activities and controls related to those activities. The bank said that FX-related investigations by other government authorities remain ongoing, including a criminal investigation by the Department of Justice and a civil investigation by the Federal Reserve, among others. The firm’s discussions with both the Justice Department and the Federal Reserve regarding resolution of potential charges are in “advanced stages,” the company stated.
LIBOR and other benchmark rate investigations. JPMorgan has received subpoenas and requests for documents and, in some cases, interviews, from several federal and state agencies and entities relating primarily to the process by which interest rates were submitted to the British Bankers Association in connection with the setting of the BBA’s London Interbank Offered Rate (LIBOR) for various currencies, principally in 2007 and 2008.
Those investigating JPMorgan for its manipulation of LIBOR include the Justice Department, the U.S. Commodity Futures Trading Commission, the SEC and various state attorneys general, as well as the European Commission (EC), the FCA, the Canadian Competition Bureau, the Swiss Competition Commission and other regulatory authorities and banking associations around the world.
JP Morgan said that some of the inquiries also relate to similar processes by which information on rates is submitted to the European Banking Federation (EBF) in connection with the setting of the EBF’s Euro Interbank Offered Rates (EURIBOR) and to the Japanese Bankers’ Association for the setting of Tokyo Interbank Offered Rates (TIBOR), as well as to other processes for the setting of other reference rates in various parts of the world during similar time periods. The bank said it is “responding to and continuing to cooperate with these inquiries.”
In 2013, JPMorgan reached a settlement with the EC regarding its Japanese Yen LIBOR investigation and agreed to pay a fine of €80 million. Last year, the Canadian Competition Bureau said it had discontinued its investigation related to Yen LIBOR. Also last year, JPMorgan reached a settlement with the EC regarding the EC’s Swiss franc LIBOR investigation and agreed to pay a fine of €72 million. In January 2015, the FCA informed JPMorgan that it has discontinued its investigation against the bank concerning LIBOR and EURIBOR.
Government enforcement investigations. The bank is responding to an ongoing investigation being conducted by the Criminal Division of the U.S. Attorney’s Office for the Eastern District of California relating to MBS offerings securitized and sold by the bank and its subsidiaries. It also has received subpoenas and informal requests for information from state authorities concerning the issuance and underwriting of MBS-related matters. The bank said it continues to respond to these MBS-related regulatory inquiries.
In addition, JPMorgan continues to cooperate with investigations by the U.S. Attorney’s Office for the District of Connecticut, the SEC’s Division of Enforcement, and the Office of the Special Inspector General for the Troubled Asset Relief Program, all of which relate to, among other matters, communications with counterparties in connection with certain secondary market trading in residential and commercial MBS.
“The firm has entered into agreements with a number of entities that purchased MBS that toll applicable limitations periods with respect to their claims, and has settled, and in the future may settle, tolled claims,” the company stated. “There is no assurance that the firm will not be named as a defendant in additional MBS-related litigation.”
Proprietary products investigations. JPMorgan has received information requests, subpoenas, and related inquiries from the SEC, other government authorities, and a self-regulatory organization regarding the firm’s sale and use of proprietary products—such as JPMorgan mutual funds in the firm’s wealth management businesses. The bank said it is responding to and cooperating with relevant authorities.
Debt sales and collection inquiries. The firm has been responding to formal and informal inquiries from various state and federal regulators regarding practices involving credit card collections litigation (including with respect to sworn documents), the sale of consumer credit card debt and securities backed by credit card receivables. These include inquiries from the Consumer Financial Protection Bureau and multiple state Attorneys General. The California and Mississippi Attorneys General have filed separate civil actions against JPMorgan Chase, Chase Bank USA, and Chase BankCard Services, alleging violations relating to debt collection practices.