Finra today announced it has censured and fined J.P. Morgan Securities LLC $1.1 million for failing to “timely disclose” 89 internal reviews or allegations of misconduct by its registered representatives and associated persons spanning a six-year period.

The fine was part of a settlement in which the company did not admit to or deny the allegations, but consented to the entry of Finra's findings, according to the self-regulatory organization.

J.P. Morgan’s reporting failures, which ran from January 2012 until April 2018, included instances where there were customer and company complaints alleging reps had misappropriated customer and company funds, committed fraud, borrowed from customers, forged, falsified or altered documents, engaged in unauthorized trading, made unsuitable recommendations and engaged in other suspicious activity, Finra said.

The alleged failures by J.P. Morgan (JPMS), which employs 26,000 registered persons, “prevented or delayed regulators, other member firms, and the public from learning about those events and, in certain instances, prevented Finra from pursuing potential disciplinary action,” Finra said in its settlement.

“Firms must live up to their responsibility as a gatekeeper and disclose allegations in a timely, accurate and complete manner. This disclosure responsibility is essential to providing transparency and maintaining the integrity of our industry,” Susan Schroeder, executive vice president of Finra's Department of Enforcement, said in a statement.

"Finra member firms have a responsibility to their fellow member firms, to Finra and other regulators, and to the investing public to disclose allegations of serious misconduct by their registered representatives,” Shroeder added.

“The firm's failure to disclose the required information presented significant risks,” Finra said in the settlement.  For example, the JPMS failed to disclose, or timely disclose, internal  reviews about and allegations that 13 reps misappropriated funds from banking customers and five reps misappropriated company funds, Finra said.

In addition, 36 of the reps under review for allegations became associated with other member firms before JPMS disclosed the required Information about them, Finra said.

JPMS's delays prevented Finra from pursuing potential disciplinary action against 30 of the former JPMS representatives over whom Finra's jurisdiction expired before JPMS disclosed the allegations.

JPMS did not immediately respond to a request for comment on the settlement.

Most of the failures to disclose required information concerned reps who voluntarily resigned after they became the subject of an internal review, or where the firm began the internal review after the rep was terminated, Finra said.

Finra found that JPMS’s failures resulted primarily from the firm's failure to establish and maintain reasonably designed written supervisory procedures and supervisory systems to identify all instances when disclosures were necessary, Finra said

As a result, in addition to the $1.1. million fine, Finra also required JPMS to take appropriate corrective measures within 60 days.

Broker-dealers are required to file with Finra a Uniform Termination Notice for Securities Industry Registration (Form U5) within 30 days of terminating a registered representative's association and to file an amendment with Finra within 30 days of learning that anything previously disclosed on the Form U5 is inaccurate or incomplete.

Firms must disclose, among other information, allegations involving fraud, wrongful taking of property, or violations of investment-related statutes, regulations, rules or industry standards of conduct.

Finra said it uses this information to help identify and investigate potential misconduct, and sanction individuals as appropriate. State securities regulators and other regulators use the information to make informed regulatory and licensing decisions. Member firms use this information to make informed hiring decisions, and investors use this information—displayed through Finra's BrokerCheck—when considering whether to do business with a registered or formerly registered person, Finra said.