SINGAPORE: The Monetary Authority of Singapore (MAS) has handed JPMorgan Chase Bank a S$2.4 million (US$1.78 million) civil penalty for failing to prevent and detect misconduct by its relationship managers in Singapore.
The bank’s relationship managers had made inaccurate or incomplete disclosures for 24 over-the-counter (OTC) bond transactions to its clients, resulting in them being charged spreads “above the bilaterally agreed rates”, MAS said in a press release on Monday (Dec 2).
The move follows MAS’ review of pricing and disclosure practices in the private banking industry, the authority said.
Investigations found that for OTC bond transactions, JPMorgan’s practice was to charge its clients a spread over the interbank prices, MAS said.
“As the interbank prices were not available to clients, they had to rely on the relationship managers’ representations to them regarding the interbank prices and spreads,” it added.
The authority said that the bank did not establish adequate processes and controls to ensure that its relationship managers adhered to pre-agreed spreads with clients when executing OTC bond transactions on their behalf.
MAS said it sampled OTC bond transactions conducted by the bank’s relationship managers and found that in the 24 transactions, they had either misrepresented the executed interbank prices or spread charged, or omitted information that the spreads charged were above the agreed rates.
This contravenes the Securities and Futures Act, the authority said.
The 24 transactions took place between November 2018 and September 2019.
JPMorgan Chase Bank has admitted liability over the misconduct by its relationship managers, paid MAS the civil penalty, and refunded the overcharged fees to its affected clients, the authority said.
It has also enhanced its pricing frameworks and internal controls to prevent the recurrence of such misconduct, it added.
A civil penalty action is not a criminal action and does not attract criminal sanctions. The civil penalty regime, which MAS said was designed to complement criminal sanctions and provide a nuanced approach to combat market misconduct, became operational at the start of 2004.