J.P. Morgan Securities, LLC Fined $1.25 Million over Failure to Appropriately Screen or Fingerprint Employees
J.P. Morgan Securities, LLC was recently fined $1.25 million by the Financial Industry Regulatory Authority (FINRA) for its failure to conduct adequate or timely background checks on nearly all of its non-registered associated persons between January of 2009 and May of 2017.
Federal law requires broker-dealers to fingerprint certain non-registered associated persons who pose a potential risk to customers. This practice helps firms identify any people previously convicted of crimes that would prevent them from working in the securities industry without explicit approval from a regulatory body.
During its investigation into J.P. Morgan Securities, LLC, FINRA discovered that the brokerage company failed to fingerprint an estimated 2,000 non-registered associate persons within a reasonable timeframe. On top of that, it only screened certain fingerprinted non-registered associated persons for specific criminal convictions noted in an internally created list and federal banking laws. In total, J.P. Morgan Securities, LLC failed to appropriately screen an estimated 8,600 people. The investigation also revealed that four people whose criminal convictions disqualified them from working with the brokerage company remained associated with the firm for as long as 10 years.
“FINRA member firms play an important gatekeeper role in keeping bad actors from harming investors,” said Executive Vice President of FINRA’s Department of Enforcement Susan Schroeder. “Firms have a clear responsibility to appropriately screen all employees for past criminal or regulatory events that can disqualify individuals from associating with member firms, even in a non-registered capacity.”
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