this Securities and Exchange Commission fined its broker-dealer subsidiary JPMorgan $4 million in fines for accidentally deleting some 47 million emails since early 2018, according to an administrator Order Thursday.
Some of those deleted emails, ordered by the U.S. Securities and Exchange Commission (SEC) and subpoenaed in at least a dozen regulatory investigations, can no longer be retrieved JP Morgan Securities LLC noted.
Others “may be relevant to potential future investigations, legal issues and regulatory investigations,” the order said.
The emails, which were accidentally deleted in 2019, came from about 8,700 email addresses, including those of as many as 7,500 employees who are in regular contact with Chase customers.
Many of the emails are “business records required to be retained under federal securities laws,” the order said.
JPMorgan Securities agreed to the SEC sanctions, which also condemned the company.
The company had filed a settlement offer in response to administrative proceedings related to the deletion, which the SEC accepted.
The SEC also ordered the company to “cease and desist from any future violations of securities laws,” which require broker-dealers to keep original copies of all communications for at least three years.
This is the third time the investment adviser has agreed to be penalized for failing to keep electronic records.
The company agreed to pay a $125 million fine in late 2021 for failing to preserve text messages and other electronic communications sent between January 2018 and November 2020.
In 2005, the company paid a $700,000 fine for failing to maintain electronic records from mid-1999 to mid-2002.
JPMorgan spokeswoman Patricia Wexler declined to comment on the latest sanctions.
In Thursday’s order, the SEC noted that JPMorgan began a program in 2016 to “delete from its systems older communications and documents that are no longer required to be retained.”
These messages included old emails, instant messages and communications sent through Bloomberg Terminal Services.
But there was a “glitch” in the program and “the identified files were not actually deleted,” the order said.
While addressing the issue in June 2019, the company’s employees “began to perform electronic communication deletion tasks beginning in the first quarter of 2018,” the order said.
According to the company’s archiving provider, the employees “wrongly” believed that all of the files were coded in such a way as to prevent the permanent deletion of records that are required by law to be kept for three years, the order said.
“However, in fact, the vendor did not apply the default retention settings in the specific email domains,” the order said.
“These communications, including many required to be maintained under broker-dealer recordkeeping rules, have been permanently deleted.”
The deletions were discovered in October 2019, when the JPMorgan team responsible for generating records related to the legal case discovered that emails had been missing from early 2018, the order said.
JPMorgan reported the removals to the SEC in January 2020.
“In at least 12 securities-related civil regulatory investigations, eight of which were conducted by (SEC) Committee staff, JPMorgan received requests for subpoenas and correspondence, which have since been expunged,” the order states. Therefore it cannot be retrieved or presented forever.”
The order also added that “JPMorgan notified only one of the committee’s eight investigative teams that its production in response to the subpoena had been impaired as a result of the 2019 deletion.”
The order states that because the deleted communications “cannot be recovered, we do not know — and cannot know — how the missing records might affect the regulatory investigation.”
In fact, a member of JPMorgan’s compliance department acknowledged in an internal email after the deletions came to light that “the missing documents may be relevant to potential future investigations, legal matters and regulatory investigations,” the order said.