J.P. Morgan Securities ("JP Morgan") agreed to pay $1.25 million to settle FINRA charges that it failed to perform adequate background checks on its non-registered associated persons.
According to FINRA, JP Morgan failed to timely fingerprint nearly all of its non-registered associated persons between January 2009 and May 2017. Federal securities laws require each FINRA member firm to fingerprint associated persons as part of background checks in order to identify persons who have been convicted of crimes that would disqualify them from employment or association with a firm. In addition, FINRA determined that JP Morgan did not adequately screen non-registered associated persons for all felony convictions or regulatory actions, which contributed to the employment of at least four persons who were subject to a statutory disqualification.
In addition to the fine, JP Morgan agreed to undertake a review of its systems and procedures for compliance with securities laws and regulations.
Commentary / Steven Lofchie
It would not be surprising if other firms also paid less than adequate (from a regulatory standpoint) attention to hiring procedures of personnel who are not required to be registered. This disciplinary action is a warning to other firms to check their procedures (going forward) and their records (going backward).
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