(CN) - JPMorgan Chase & Co. will pay more than $350 million to settle federal regulators' claims that it doesn't disclose conflicts of interest to clients when it came to the investment products it recommended.
In reaching the settlement agreements with regulators announced Friday, the banking giant admitted that two of its subsidiaries -- its nationally chartered bank, JP Morgan Chase Bank N.A., and its securities subsidiary, J.P. Morgan Securities LLC -- failed to tell customers it typically advised them to invest their growth-capital in JPMorgan-managed mutual funds.
This preference affected two fundamental aspects of money management - asset allocation and the selection of fund managers -- and deprived JPMorgan's clients of information they needed to make fully informed investment decisions, the government said.
Under the terms of an agreement with the U.S. Securities and Exchange Commission, JPMorgan Chase will pay $267 million in penalties and disgorgement of funds. It will pay an additional $100 million to settle claims made in a parallel action by the U.S. Commodity Futures Trading Commission.
In addition to practices mentioned above, the SEC also found that JPMorgan failed to disclose several conflicts of interest to certain high net worth and ultra-high net worth clients of JPMorgan's U.S. Private bank and certain clients of Chase Private Client, who invested in J.P. Morgan Investment Portfolio, a discretionary managed account program available to affluent Chase Bank clients.
Darin Oduyoye, a JPMorgan spokesman, said the disclosure issues were not intentional and that the bank regrets them.
"We have always strived for full transparency in client communications, and in the last two years have further enhanced our disclosures in support of that goal," Oduyoye said.
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