On January 16, 2024, the SEC announced a settled enforcement action against J.P. Morgan Securities LLC (JPMS) for violating whistleblower protection laws.  As you can read in this post, we have blogged on a number of occasions about companies that have violated these laws by trying to restrict current and former employees from blowing the whistle.  JPMS’s case involves a very different situation, trying to restrict a customer’s ability to blow the whistle.  When advisory clients and brokerage customers received a credit or settlement of over $1,000 from JPMS, the company required them to sign an agreement to keep the details of the settlement and other information confidential.  While the agreements permitted clients to respond to SEC inquiries, they limited their ability to blow the whistle to the SEC.

In the Press Release announcing the settlement, Enforcement Division Director Gurbir S. Grewal noted:

“For several years, it (JPMS) forced certain clients into the untenable position of choosing between receiving settlements or credits from the firm and reporting potential securities law violations to the SEC.”

You can read more about the settlement, in which JPMS entered into a cease and desist order, paid a $18 million fine and was censured, in the related Press Release and Order.

As always, your thoughts and comments are welcome!