J.P. Morgan Chase & Co. is enhancing the transparency of its transactions with private-banking clients after regulators questioned its executives about whether it is steering the clients to its own investment products, the Wall Street Journal reported, citing sources.
The firm is now trying to make it clearer to clients the differences between its own offerings and third-party options, and how much of their assets are invested in each, the report said.
The Office of the Comptroller of the Currency, which routinely monitors banks’ sales of in-house financial products, raised the questions in meetings with bank executives several months ago, the sources told the newspaper.
“Examining for conflicts of interest is a fundamental part of our ongoing examination process,” an OCC spokesman was quoted as saying.
“Being transparent is part of our normal course of business and it’s what drives our client communications,” said Darin Oduyoye, a spokesman for J.P. Morgan’s asset-management unit.
It isn’t known how big a percentage of client assets resides in J.P. Morgan’s financial products, the report said, adding that it also isn’t clear whether regulators consider the matter fully closed.
J.P. Morgan’s private-banking division caters to individuals with at least US$10 million in investible assets. The private bank has US$383 billion of client assets under management, or nearly a quarter of J.P. Morgan asset management’s US$1.7 trillion total assets under management, the newspaper said, citing the company’s June 30 earnings report.
The asset-management business made up about 11 percent of the firm’s overall revenues last year, it added.
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