British financial regulators hit the London unit of JP Morgan Chase (NYSE: JPM) with a record 33.3 million pound ($48.8 million) fine for comingling a portion of client money with firm capital. According to the Financial Services Authority (FSA), JP Morgan Securities Ltd (JPMSL) failed to separate all funds between November 2002 and July 2009.
During that time frame JPMSL held funds ranging from $1.9 billion to $23 billion. If the firm had run into financial trouble at any point in that period, client money would have been at risk of loss, according to the FSA.
“JPMSL committed a serious breach of our client money rules by failing to segregate billions of dollars of its clients’ money for nearly seven years. The penalty reflects the amount of client money involved in this breach,” said FSA Director Margaret Cole.
JP Morgan avoided a larger fine from the FSA by being proactive about the issue, first stating last August that 8.5 billion pounds of client money may had been mixed with its own funds. An auditor was hired at the time to review accounts of JPMSL.
The issue of keeping client funds and company funds separate flared up after the collapse of Lehman Brothers in 2008.
