A former brokerage client has sued JPMorgan Chase & Co for steering him and other investors to funds, which were both underperforming and overpriced. The complaint alleges that JPMorgan did this with knowledge to boost the fees and profits of the bank. The lawsuit, which seeks class action, mentions that JPMorgan had falsely represented its financial advisers that they were under fiduciary duty to clients, while at the same time its bonuses encouraged the sale of proprietary funds.
The lawsuit was filed in New York Supreme Court in Manhattan following a report published on July 2 by the New York Times that exposed and called into question some practices of JPMorgan.
The lawsuit further alleges that JPMorgan’s marketing materials emphasized “inflated, hypothetical returns” and carefully suppressed a “much less rosy” scenario of actual performance.
After the housing boom burst, JPMorgan had turned to proprietary funds and investments to compensate for its rapidly declining profits, alleges the lawsuit. Apparently, the strategy allowed JPMorgan to collect double fees for management and sales.
The lawsuit also mentioned that the sales practices of JPMorgan in the alleged matter is being currently investigated by the SEC, the Financial Industry Regulatory Authority and the Manhattan District Attorney.
In an interview with the media, FINRA spokeswoman Nancy Condon affirmed the fact and said, “We’re looking at it.”
The case is Alan H. Tralins v. JPMorgan Chase & Co, New York state Supreme Court, No. 652448/2012, New York County.