All three regulators had instigated actions against New York-based JP Morgan Securities following an earlier conflict of interest investigation into the alleged undue influence of investment banking interests on securities research.
That investigation led to enforcement actions against 10 of the top US investment firms, including JP Morgan, which settled in 2003. According to the SEC, it also led to the discovery that JP Morgan Securities' e-mail record keeping was incomplete.
According to Reuters, the SEC found that some back-up tapes were damaged, could not be found, or had not been made for some periods of time.
Corporate scandals such as Enron and Worldcom, and the passing of the Sarbanes-Oxley Act have highlighted the need for adequate internal record keeping – and the SEC, the NYSE and the NASD all took action against the company.
"JP Morgan Securities' representation that its e-mail production was complete, without disclosing that it had failed to retain, locate and restore all e-mail responsive to our investigation, is simply unacceptable," said Susan L. Merrill, chief of enforcement, NYSE Regulation.
Each regulator has fined the firm $700,000. JP Morgan Securities has also been required to review its procedures regarding the preservation of electronic communications for compliance with Exchange rules and the federal securities laws. It has neither admitted nor denied the allegations.
