JP Morgan handed record UK fine
UK financial services watchdog penalises firm $49m for mishandling clients' funds.
Last Modified: 03 Jun 2010 14:33 GMT
Client money was held in an unsegregated account with JP Morgan Chase, the FSA said [AFP]

JP Morgan Securities has been fined a record $49m by a UK financial services watchdog for mishandling clients' funds.

The fine, handed out on Thursday, is the largest penalty ever handed out by Britain's Financial Services Authority (FSA), the AP news agency reported.

The regulator said that the size of the fine should send a strong message to firms to take more care with clients' money, and warned it had more cases in the pipeline.

JP Morgan Securities failed to segregate the client money held by its futures and options business with JPMorgan Chase Bank NA for more than six years between November 2002 and July 2009, the FSA said.

Instead of being held overnight in a segregated money market account, JP Morgan Securities' client money was mistakenly held in an unsegregated account with JPMorgan Chase.

Under the FSA's client money rules, firms are required to keep client money separate from the firm's money in segregated accounts with trust status to protect the client funds if the firm goes bankrupt.

"The FSA has repeatedly emphasised the importance of ensuring that client money is adequately protected," Margaret Cole, the FSA's director of enforcement and financial crime, said.

"Despite being one of the largest holders of client money in the UK, JPMSL, failed to do so."

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