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JP Morgan has been fined $18 million by the Securities and Exchange Commission (SEC) for impeding clients and brokerage customers from reporting legal breaches to regulatory authorities. The payments giant has consented to paying the penalty charge.

According to the SEC, JP Morgan inserted provisions into their contracts between March 2020 and July 2023 that hindered clients from approaching the SEC with evidence of law violations. This situation left clients with the dilemma of choosing between receiving settlements, credit, and services or reporting wrongdoing to the SEC.

Corey Schuster, co-chief of the enforcement division’s asset management unit, emphasized the importance of investors, whether retail or otherwise, being able to report complaints to the SEC without interference. He highlighted the need for those drafting or using confidentiality agreements to ensure that such agreements do not include provisions that obstruct potential whistleblowers.

The company faced charges for violating the whistleblower protection rule established under the Securities and Exchange Act of 1934. This rule aims to prevent institutions from obstructing individuals in alerting SEC staff to violations of securities laws.

JP Morgan has agreed to a cease and desist order in response to the charges.

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