As well as, the order continues, “though the agreements permitted shoppers to reply to SEC inquiries, they didn’t allow shoppers to voluntarily contact” the SEC.
“Whether or not it’s in your employment contracts, settlement agreements or elsewhere, you merely can not embrace provisions that stop people from contacting the SEC with proof of wrongdoing,” stated Gurbir Grewal, director of the SEC’s Division of Enforcement in an announcement. “However that’s precisely what we allege J.P. Morgan did right here.”
For a number of years, “It pressured sure shoppers into the untenable place of selecting between receiving settlements or credit from the agency and reporting potential securities legislation violations to the SEC,” Grewal defined. “This either-or proposition not solely undermined important investor protections and positioned traders in danger, however was additionally unlawful.”
Traders “should be free to report complaints to the SEC with none interference,” defined Corey Schuster, co-chief of the Enforcement Division’s Asset Administration Unit. “These drafting or utilizing confidentiality agreements want to make sure that they don’t embrace provisions that impede potential whistleblowers.”
The SEC’s order finds that the financial institution’s securities unit violated Rule 21F-17(a) of the Securities Trade Act of 1934, a whistleblower safety rule that prohibits taking any motion to impede a person from speaking straight with the SEC employees about attainable securities legislation violations.