New York Securities Lawyer Blog
On September 16, 2019, the Financial Industry National Regulatory Authority (“FINRA”) reported that it had censured and fined J.P. Morgan Securities (“JPM”) $1.1 million for failing to timely disclose 89 internal investigations. Firms have a regulatory obligation to disclose to FINRA or the appropriate regulatory body all internal reviews and allegations of misconduct by registered individuals or associated persons.
Broker-dealers such as JPM are required to file with FINRA a Uniform Termination Notice for Securities Industry Registration (“Form U5”) within 30 days of terminating a registered representative. They are also required to file an amendment with FINRA within 30 days of learning that anything previously disclosed on the Form U5 is inaccurate or incomplete. Firms are required to disclose allegations involving fraud, wrongful taking of property, or violations of investment-related statutes, regulations, rules or industry standards of conduct.
FINRA uses the information filed in the Form U5 to help identify and investigate potential misconduct and sanction individuals as appropriate. The Form U5 is a critical source of information on a financial adviser, and informs regulators, future employers, and potential clients of the nature of the adviser’s misconduct. State securities regulators and other regulators use the information to make informed regulatory and licensing decisions.
According to FINRA, JPM neglected to properly file Form U5’s for 89 internal investigations. Some of these investigations and allegations of wrongdoing included, per FINRA, misappropriation of customer and company funds, borrowing from customers, forgery or falsification or alteration of documents, unauthorized trading, making unsuitable recommendations, structuring and other suspicious activity. JPM filed many of these Form U5’s over two years late, thereby impeding regulators ability to halt harmful activity.
The attorneys at Lax & Neville LLP have extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses as a result of investment and securities fraud. Additionally, attorneys at Lax & Neville are experienced with employment law in the financial services industry, and dealing with regulatory bodies such as the SEC. If you are a victim of fraud or are a Financial Advisor or Broker-dealer with a prospective regulatory issue, please contact Lax & Neville LLP today at (212) 696-1999 to schedule a consultation.