Magazine article American Banker

Morning Scan: JPMorgan Fined for Conflicts; Banks Beef Up Cybersecurity

Magazine article American Banker

Morning Scan: JPMorgan Fined for Conflicts; Banks Beef Up Cybersecurity

Article excerpt

Byline: Andy Peters

Receiving Wide Coverage ...

JPMorgan's Wrist Slapped: JPMorgan Chase will pay $307 million to settle Securities and Exchange Commission and Commodity Futures Trading Commission probes into the bank's alleged failure to tell its wealth-management clients about conflicts of interest. One allegation is JPMorgan didn't tell clients it was putting their money in more-expensive funds that JPMorgan itself managed, the Wall Street Journal said. Also, JPMorgan put clients' money in third-party funds that paid fees to JPMorgan. JPMorgan said the moves were a mistake and were unintentional.

The SEC also ordered JPMorgan to hire an independent consultant to review its actions in the future, to make sure JPMorgan doesn't accidentally put its clients' money in funds that generate more fees for JPMorgan (without telling clients). JPMorgan won't have to stop giving its own funds and business partners preferential treatment, the New York Times noted. But it will have to at least disclose it from now on. Of the fines, $267 million will go to the SEC and $40 million will go to the CTFC, the Financial Times said.

Wall Street Journal

Banks are taking drastic steps to crack down on actions taken by their own employees -- often unwittingly -- that expose the banks to cyberattacks. Banks are banning employees from using USB drives, warning them about what they post on social media and discouraging the use of "out-of-office" emails. JPMorgan Chase bans its employees from using work email addresses for personal use.

Several banks are also monitoring whether employees are falling victim to "spear-phishing" attempts. JPMorgan recently ran a fake spear-phishing test and found that 20% of its employees fell for it. TD Bank has also sent spear-phishing attempts, to try to bait employees; if the employee falls for it, he or she gets an instant pop-up video telling them they made the mistake. …

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