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June 3, 2010    

JP Morgan Securities receives record fine

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by Kay Murchie

A record fine for JP Morgan Securities has been imposed by the Financial Services Authority (FSA) for failing to protect client money over a period that spanned almost seven years.

The largest ever fine of £33.32 million ($48.2 million) would have actually been £47.6 million but the firm agreed to co-operate during the investigation, thereby receiving a 30% discount.

According to the FSA, if JP Morgan had become insolvent during this seven-year period, considerable amounts of client money would have been at risk of being lost.

However, the misconduct was not deliberate and JP Morgan Securities self-reported the error and no clients suffered losses.

However, Margaret Cole, FSA director of enforcement and financial crime, described the error a “serious breach”.

She comments: “This penalty sends out a strong message to firms of all sizes that they must ensure client money is segregated in accordance with FSA rules.”

Ms Cole also warned that there are “several more cases in the pipeline” and JP Morgan Securities might not be the last to be fined.

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