JPMorgan Chase relationship managers allegedly misrepresented or withheld key pricing details, causing clients to pay spreads exceeding agreed rates, said the Central Bank of Singapore.
The Monetary Authority of Singapore (MAS) fined JPMorgan Chase & Co. S$2.4 million (approximately USD 1.8 million) for failing to prevent and detect misconduct by its relationship managers during 24 over-the-counter bond transactions.
The case involved 24 over-the-counter bond transactions where RMs misrepresented or omitted key pricing details, leading to clients being overcharged. The violations highlighted weaknesses in JPMorgan’s internal controls and compliance processes.
Namely, the MAS investigation revealed that JPMorgan’s approach to over-the-counter (OTC) bond trading involved charging clients a spread above interbank prices, which were not directly accessible to customers. This system left clients dependent on the relationship managers’ representations of interbank rates and the associated spreads, creating a lack of transparency in the pricing process. Unfortunately, not all the firm’s relationship managers conveyed the pricing information fairly.
The charged banking institution admitted liability and has since refunded affected clients, who represented a very small fraction of the total trades conducted during the relevant period, according to JPMorgan, and implemented measures to strengthen internal controls and pricing transparency, including enhancing monitoring and trade governance practices. Investigations into the involved employees remain ongoing.
We have earlier reported that JPMorgan considers the potential of artificial intelligence (AI) for internal processes to avoid human errors and boost efficiency. The bank representatives note that in areas such as trading, where $2 trillion worth of securities are in play every day, machine intelligence can become an important tool in equity hedging. The institution has already implemented an internal digital assistant based on generative artificial intelligence for its employees.