In one way or the other, organizations make mistakes that cost them dearly. This is inclusive of renown financial institutions such as JP Morgan, which is the tenth largest bank in the world and the third largest bank in the United States. In the past years, this financial institution had a breach with the law for various reasons regarding their operations which has led to the bank losing billions of dollars in penalty and compensations. This paper discusses the financial and legal issues faced by JP Morgan in relation to the Securities and Exchange Commission (SEC).
In 2013, SEC charged JP Morgan with overstating its financial results, which was caused by the overvaluation of its investments to conceal the resulting losses estimated to millions of dollars in trading. The misstatement gave the investors wrong information regarding the company's performance which was against the SEC regulation. According to the securities exchange act of 1934, Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rules 13a-11, 13a-13, and 13a-15, which requires the involved companies in security trading to provide appropriate report to the public to avoid misconceptions and enhance decision making by the involved parties. In this regard, JP Morgan failed to provide the public with an appropriate report about the losses accrued in the trading process, leading to misinformation which led to some of the investors to purchase mortgages which imploded. The report which was attributed to the company's lack of monitoring its internal controls, sparked the interest of SEC's investigation which confirmed that the company had concealed much important information from the public which led massive losses to the investors. For this reason, JP Morgan lost billions of dollars in fines and compensation to the affected parties.
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Work Cited
https://www.sec.gov/news/press-release/2013-187
