Separately, in 2012, arbitrators ordered JPMorgan to pay $373 million plus interest to American Century Investment Management Inc. of Kansas City, Missouri, after determining that JPMorgan had “stacked the cards” by giving its employees incentives to favor its own funds in retirement accounts.
Regulatory Pressure
The SEC’s look into the operation was reported by Bloomberg in August, when a person familiar with the matter said a review was in its early stages. The OCC also was gathering information about potential conflicts there, the Wall Street Journal reported in July.
JPMorgan’s asset-management business has grown as it and other big banks face regulatory pressure in other areas, including trading. The bank had the highest percentage growth in asset inflows of any large manager in the five years through 2014, ending the period with $1.7 trillion in assets under management, according to a February presentation it made to investors.
JPMorgan’s asset-management unit includes investment advisors––who oversee pensions, trusts and private accounts––and also manages funds in which those clients could invest, generating fees for the bank.
JPMorgan has built its asset-management unit in part by expanding its mutual fund operation. It has $443 billion in assets under management in hundreds of mutual funds, and more in hedge funds and other investments.
By contrast, Morgan Stanley, Citigroup Inc. and Bank of America Corp. have shed mutual fund businesses over the past decade, after being fined for allowing conflicts of interest to result in sales abuses.