JP Morgan censured by NYSE regulation and fined $150,000
NEW YORK – In mid-June, JP Morgan Securities, based in New York, was censured by NYSE-Euronext's regulatory arm, NYSE Regulation. The authority also imposed a fine of $150,000, and the securities firm consented to the regulatory actions without admitting or denying guilt to findings of inaccurate reserve account and net capital computations and other violations.
A NYSE hearing officer found that from March 2004 through January 2005, the firm experienced difficulties in reconciling accounts following a conversion of its fixed-income processing system from an internal system to a system using an outside vendor. The firm also erroneously concluded that these differences could be treated as bank issues, as opposed to securities clearance issues.
Accordingly, the firm failed to include, when computing its net capital and reserve account requirements, certain aged items that were not paired-off in the reconciliation process.
As a result, the firm experienced a net capital deficiency of approximately $464 million as of March 31, 2004, and a reserve account deficiency of approximately $1.7 billion as of April 16, 2004.
Moreover, following the conversion, some of the firm's books and records were inaccurate because it failed to identify and resolve these unpaired differences on time. In addition, JP Morgan Securities also submitted an inaccurate Key Operational Indicator Report to the NYSE after the conversion, because the firm had reported its reconciliation differences on a net, rather than gross, basis.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Prop shops recoil from EU’s ‘ill-fitting’ capital regime
Large proprietary trading firms complain they are subject to hand-me-down rules that were originally designed for banks
Revealed: the three EU banks applying for IMA approval
BNP Paribas, Deutsche Bank and Intesa Sanpaolo ask ECB to use internal models for FRTB
FCA presses UK non-banks to put their affairs in order
Greater scrutiny of wind-down plans by regulator could alter capital and liquidity requirements
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Saudi Arabia poised to become clean netting jurisdiction
Isda AGM: Netting regulation awaiting final approvals from regulators
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
CFTC chair backs easing of G-Sib surcharge in Basel endgame
Isda AGM: Fed’s proposed surcharge changes could hike client clearing cost by 80%
UK investment firms feeling the heat on prudential rules
Signs firms are falling behind FCA’s expectations on wind-down and liquidity risk management