Securities broker JP Morgan has been fined $1.25m by US financial regulators for failing to conduct adequate background checks on employees for more than eight years.
The Financial Industry Regulatory Authority (FINRA) imposed the fine after discovering that the firm had not fingerprinted 2,000 people between 2009 and 2017, a requirement under federal securities laws. JP Morgan had investigated criminal records to determine whether employees would be disqualified from working in financial services, but their checks were found to not go far enough.
FINRA said that four individuals, one of whom had been working at JP Morgan for 10 years, were allowed to be associated with the firm despite having criminal convictions, which would otherwise have disqualified them from holding such a position if proper checks had been carried out.
Susan Schroeder, Executive Vice President of FINRA’s Department of Enforcement, said, “FINRA member firms play an important gatekeeper role in keeping bad actors from harming investors. Firms have a clear responsibility to appropriately screen all employees for past criminal or regulatory events that can disqualify individuals from associating with member firms, even in a non-registered capacity."
JP Morgan neither admitted or denied any wrongdoing but agreed with FINRA's findings and pledged a commitment 'to having appropriate controls to comply with regulatory requirements.'
This story highlights the need for adequate background checks, not only to manage risk within your organisation, but to also make sure you comply with all laws applying to your business sector.
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