8-KOther Events

JPMORGAN CHASE & CO 8-K Report (Oct 1, 2003)

Filed October 1, 2003For Securities:JPMJPM-PCJPM-PDJPM-PKJPM-PLJPM-PMJPM-PJAMJBVYLD

Summary

J.P. Morgan Chase & Co. (JPM) filed an 8-K on October 1, 2003, disclosing an agreement with the Securities and Exchange Commission (SEC) to resolve matters concerning J.P. Morgan Securities Inc.'s (JPMSI) initial public offering (IPO) allocation practices. While JPMSI did not admit or deny the allegations, the firm agreed to an injunction preventing future violations and to pay a $25 million civil penalty. This settlement addresses SEC allegations that JPMSI violated Rule 101 of Regulation M by soliciting aftermarket orders for IPO shares before IPOs were finalized. Additionally, the firm was accused of violating NASD Conduct Rule 2110 regarding "just and equitable principles of trade" by conditioning allocations of oversubscribed IPO shares on customers accepting shares in less desirable, "cold" IPOs. Importantly, the Firm stated it would not be taking a charge to earnings related to this settlement, indicating the financial impact is considered contained.

Key Highlights

  • 1J.P. Morgan Securities Inc. (JPMSI), a JPM subsidiary, settled with the SEC regarding IPO allocation practices.
  • 2The settlement involves allegations of violating SEC Rule 101 of Regulation M and NASD Conduct Rule 2110.
  • 3JPMSI agreed to pay a $25 million civil penalty.
  • 4The firm will be subject to an injunction prohibiting future violations of the mentioned rules.
  • 5JPMSI did not admit or deny the SEC's allegations.
  • 6J.P. Morgan Chase & Co. will not incur an earnings charge as a result of this settlement.

Frequently Asked Questions

This 8-K reports a settlement between J.P. Morgan Securities Inc. (JPMSI), a subsidiary of J.P. Morgan Chase & Co., and the Securities and Exchange Commission (SEC) concerning JPMSI's practices in allocating initial public offering (IPO) shares.

The SEC alleged that JPMSI violated rules by attempting to induce aftermarket orders for IPO shares before the IPOs were completed and by improperly influencing customers to accept allocations in less desirable 'cold' IPOs by promising them shares in oversubscribed IPOs.

J.P. Morgan Chase & Co. stated that it will not be taking a charge to its earnings in connection with this settlement. The firm agreed to pay a $25 million civil penalty.

No, J.P. Morgan Securities Inc. did not admit or deny any of the allegations made by the SEC as part of the settlement agreement.