JP Morgan Securities provided inconsistent and contradictory statements to a customers after she uncovered unauthorized trading activity. This blog will detail one customer’s first-hand experience, her assessment, and opinion related to her complaint filed against JP Morgan Securities before the Financial Industry Regulatory Authority (FINRA). The information provided here is for informational purposes only.

Background

The client owned multiple Chase bank accounts for over 17 years before opening a self-directed cash investment account with JP Morgan securities (JPMS; CRD#: 79), a broker-dealer subsidiary of JPMorgan Chase & Co. The customer did not give any authority to JP Morgan securities to trade securities in her account. The customer traded using JP Morgan securities online portal for approximately 14 months. She had the absolute WORST experience with JP Morgan securities.

Complaints Against JP Morgan Securities

The phone and online JP Morgan securities representatives did not honor her requests to change her default liquidation method in a timely manner. It took JPMS almost two weeks to finally honor the customer’s request even after receiving repeated phone and online requests. Frustrated, the customer opened another investment account with a different brokerage firm.

The customer also transferred cash from JPMS investment account to her connected bank account using the Automatic clearing house (ACH) option. She received ACH withdrawal confirmation that showed transfer status as confirmed. Despite receiving written confirmation from JP Morgan securities that complete amount was transferred, only 1/3rd of cash was transferred. The customer called with an inquiry and a case ticket was created to investigate the whereabouts of the remaining amount.

The investigation by JPMS determined that the complete amount was transferred. It has been over two years and the customer is still awaiting a resolution.

Frustrated Customer Transfers Out of JP Morgan Securities

The customer decided to move her complete investment account to another brokerage firm through the automated system (ACATS). JPMS approved the request. Intriguingly, during the period when the customer’ account was frozen pending transfer to the next brokerage firm, JPMS’ statements showed that unauthorized trading activity occurred in which many FULL shares of multiple securities were traded without the customer’s consent or knowledge.

Trading in a non-discretionary account is a breach of contract. As a result of the questionable trades, the customer incurred losses and wash sales. The client printed the account statements showing unauthorized trading activity and contacted JPMS to inquire how could JPMS take discretion of a non-discretionary account.

Instead of providing an explanation about the unauthorized trading activity, JP Morgan securities just altered the customer’s account statements to cover up.

FINRA Complaint

The customer filed a formal complaint with FINRA against JP Morgan securities alleging dishonest practices, misconduct, and fraud. SEC rules mandate that the brokerage account statements must be in an unalterable WORM (write once, read many) format. However, after the customer informed JPMS’ representatives about her account statements showing unauthorized trading activity (in a non-discretionary account), JPMS changed the customer’s account statements. The altered statements did not say ‘corrected statement’. The customer printed the altered account statements, which showed clear discrepancies. In response,JP Morgan securities blocked the customer’s access to her own investment account.

Withholding Evidence After Receiving Multiple Subpoenas

The customer sent three discovery requests to JPMS to gain access to her account. JPMS objected to providing important documents. Eventually, the customer filed her first motion to compel JPMS to provide her account documents. Despite the arbitration panel’s clear orders, JPMS withheld important documents in violation of FINRA rules. The customer filed the second motion to compel JPMS to produce all withheld documents. Both motions to compel were heard by the full panel. Strangely, JPMS was not sanctioned by the arbitration panel for not following the arbitration panel’s clear orders.

The next set of documents produced, after the second motion to compel was filed, provided substantial proof against JPMS practices. The security industry expert hired for this case wrote in her opinion report that…  


“Indeed, service ticket notes authored by JPMS associated persons discussing the discrepancy appeared to suggest that not even the associated persons could explain the discrepancy and created more questions than answers, including a suggestion that JMPS had a books and records policy violation. It is worth noting that the suggestion of a books and records policy violation did not appear to be escalated to compliance.”

Despite all, JPMS got away without paying any damages to the customer.

For more info, visit 

Tampered Account Documents: Will Regulators hold JP Morgan Securities Accountable?

 

 

https://piaba.org

https://brokercheck.finra.org/firm/summary/79

 

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