On 2 December 2024, the Monetary Authority of Singapore (MAS) imposed a civil penalty of SG$2.4 million on JPMorgan Chase Bank, N.A. for failing to prevent and detect misconduct committed by its relationship managers. The penalty follows an investigation into twenty-four over-the-counter bond transactions in which clients were overcharged due to misrepresentations and incomplete disclosures.
The Monetary Authority of Singapore is Singapore’s central bank and primary financial regulatory authority, tasked with maintaining the integrity of Singapore’s financial system. JPMorgan Chase Bank, N.A., a global financial services leader, operates within Singapore’s jurisdiction and is subject to its regulatory frameworks.
Between November 2018 and September 2019, JPMorgan Chase relationship managers conducted twenty-four over-the-counter bond transactions in which clients were charged spreads exceeding the bilaterally agreed rates. These spreads were built over interbank prices, which were not disclosed to the clients. As a result, the clients relied entirely on their relationship managers’ representations regarding pricing components. During the investigation, MAS found that in some cases, the relationship managers misrepresented the interbank prices or the spreads, while in others, they failed to inform clients that the spreads charged were higher than the agreed rates. These practices occurred in a sequence of transactions and revealed systemic deficiencies in JPMorgan Chase’s internal controls and processes.
The actions of JPMorgan Chase’s relationship managers allegedly contravened provisions of the Singapore’s Securities and Futures Act. Under section 201(c) of Singapore’s Securities and Futures Act, no person is permitted to make a statement they know to be false in a material particular in connection with the subscription, purchase, or sale of any capital market product. Under section 201(d) of Singapore’s Securities and Futures Act, it is prohibited to omit any material fact necessary to prevent statements made from being misleading. The alleged violations constituted a failure to adhere to these obligations, resulting in significant detriment to the affected clients.
MAS further held JPMorgan Chase liable under section 236C of the Singapore’s Securities and Futures Act, which imposes responsibility on corporations for failing to prevent or detect contraventions committed by their employees when such misconduct is attributable to negligence. JPMorgan Chase admitted its liability under this provision and agreed to pay the SG$2.4 million civil penalty. The bank has refunded the affected clients the overcharged amounts and has implemented enhanced pricing frameworks and internal controls to prevent similar incidents in the future.
The civil penalty regime in Singapore, established under section 232 of the Singapore’s Securities and Futures Act, allows MAS to impose penalties up to three times the profit gained or loss avoided through contraventions, with minimum penalties set at SG$100,000 for corporations.
