JP Morgan entities in Hong Kong reprimanded for regulatory breaches, fined HK$5.6 million
Securities and Futures Commission reprimands the US bank for breaching regulations on disclosing its financial interests relating to 30 research reports in 2013, among other shortcomings
The Securities and Futures Commission (SFC) has reprimanded two JP Morgan entities for regulatory breaches and fined them HK$5.6 million.
J.P. Morgan Securities (Asia Pacific) (JPMSAP) and JPMorgan Chase Bank, National Association (JPMCB) breached regulations including disclosure failures in research reports and offered offshore listed index options without the required licences from April 2003 to July 2015, the regulator said in a statement released on Thursday.
The regulator of Hong Kong’s securities and futures markets said it took into account that JP Morgan has taken remedial measures to rectify the deficiencies in its securities position reporting system,
stopped offering offshore listed index options to clients, and had co-operated in the investigation.
According to SFC, JPMSAP failed to disclose JP Morgan’s financial interests in respect of certain listed issuers covered in its research reports.
“During the sample year 2013, JPMSAP was required to disclose its financial interests of more than 1 per cent in four listed issuers in 33 research reports, but it failed to do so in 30 of these reports,” the SFC said.
The regulator said JP Morgan became aware of the issue in the US on October 2013.
The failure was caused by deficiencies in JP Morgan’s global securities position reporting system which failed to include stock borrowings and options positions in the calculation of positions in relevant securities.
Meanwhile, the two companies did not report the breaches or suspected breaches to the SFC in a timely manner as required.
JP Morgan reported the breaches to the SFC around five months after their discovery.