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JPMorgan to Pay $300 Million to Settle U.S. Allegations

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JPMorgan Chase & Co. will pay more than $300 million to settle U.S. allegations that it didn’t properly inform clients about what the Securities and Exchange Commission called numerous conflicts of interest in how it managed customers’ money over a half decade.

The largest U.S. bank by assets failed to tell customers that it reaped profits by putting their money into mutual funds and hedge funds that generated fees for the company, the SEC said in announcing $267 million in penalties and disgorgement against JPMorgan. The bank agreed to pay $40 million more as part of a parallel action by the Commodity Futures Trading Commission.

JPMorgan admitted disclosure failures from 2008 to 2013 related to two units that manage money — its securities subsidiary and its nationally chartered bank — as part of the SEC settlement. The New York-based bank said that the omissions in its communications were unintentional and that it has since enhanced its disclosures.

“Firms have an obligation to communicate all conflicts so a client can fairly judge the investment advice they are receiving,” Andrew J. Ceresney, director of the SEC Enforcement Division, said in a statement. “These JPMorgan subsidiaries failed to disclose that they preferred to invest client money in firm-managed mutual funds and hedge funds, and clients were denied all the facts to determine why investment decisions were being made by their investment advisers.”

Two-Year Probe

The settlement caps roughly two years of investigations during which the government deposed asset-management executives and issued subpoenas for internal documents. The SEC’s enforcement division had been looking into whether the bank encouraged their financial advisers to steer clients improperly into investments that generated fees for the bank, people familiar with the investigation said earlier this year.

In its order, the SEC said the bank cooperated with commission staff, hired an independent compliance consultant and carried out its recommendations.

The disclosure weaknesses cited in the settlements “were not intentional and we regret them,” said Darin Oduyoye, a JPMorgan spokesman. “We have always strived for full transparency in client communications, and in the last two years have further enhanced our disclosures in support of that goal.”

Record Penalty

While the agency extracted a record penalty for an asset manager, JPMorgan can continue operating as it has been in one of its most profitable businesses. The $307 million in fines and disgorgement accounts for a bit more than 1 percent of the company’s annual operating profits, or about a month of those at its asset-management division.

The settlement, announced on the Friday before Christmas, didn’t go far enough, said Dennis Kelleher, a lawyer who runs Better Markets, a consumer advocacy group.

“The conduct involves steering clients into proprietary products so brokers get higher commissions and JPMorgan gets good asset-management numbers,” said Kelleher, who said the practices remain costly for customers, additional disclosures notwithstanding. “This wasn’t a rogue trader. It wasn’t an individual employee. It’s not a mistake. It’s a five-year pattern.”

‘Exhausting Process’

With the settlement, the bank moves beyond one of its last major regulatory challenges since the 2008 financial crisis. JPMorgan has been penalized more than $23 billion in major settlements with U.S. authorities in recent years, in connection with allegations that included conspiring to manipulate foreign-currency rates, allowing the “London Whale” trader to exceed risk limits, failing to flag transactions related to Bernard Madoff’s Ponzi scheme and misrepresenting the value of mortgage-backed securities.

“Investors are glad that the bank agreed to a settlement to move forward and this isn’t an overhang for the business anymore,” said Pri de Silva, a senior banking analyst at CreditSights Inc. in New York. “We are at the tail-end of the post-crisis litigation actions, but its been an expensive, exhausting process. I think both banks and the investor base are tired of it.”

JPMorgan shares fell 2.8 percent to $64.40 at 4:15 p.m. amid a broad decline in financial shares. The bank has climbed 2.9 percent this year, outperforming the 2.3 percent decline of the KBW Bank Index.

Expanded Operation

The SEC’s inquiries looked into JPMorgan Asset Management, a unit that grew rapidly after the 2008 financial crisis, as new regulations crimped areas including hedge-fund and proprietary trading operations that have traditionally been lucrative for Wall Street firms. The bank expanded an operation that pairs wealth management and investment funds in one reporting structure, run by Mary Erdoes, seen as one of a half-dozen in-house favorites to eventually replace Chief Executive Officer Jamie Dimon.

JPMorgan expanded its in-house mutual funds even as many competitors pulled back. Over the past decade, Morgan Stanley, Citigroup Inc. and Bank of America Corp. have shed such fund businesses after being fined for allowing conflicts of interest to result in sales abuses.

JPMorgan Asset Management — with mutual funds, alternative investments, private wealth management and some trust operations — had the highest rate of revenue growth among the bank’s four main operating units. It also had the highest percentage growth in asset inflows of any large manager in the five years through 2014, ending the year with $1.7 trillion under management, according to a February presentation to investors.

Cross-selling and synergies between units was worth $14 billion across the bank in 2012, it said in a February 2013 presentation to investors. The bank attributed $1.1 billion of that to the synergies of selling the bank’s investment-management products to private banking clients.

‘Numerous Conflicts’

JPMorgan “failed to disclose numerous conflicts of interest to certain wealth management clients,” the SEC said in its announcement. That included not telling customers of a retail product, Chase Strategic Portfolio, that it was designed to favor in-house mutual funds, or that the bank might put them into a higher-fee fund when a lower-fee version of the same fund was available. The bank’s investment advisory business, J.P. Morgan Securities LLC, also failed to disclose that it had a financial incentive to favor the bank’s funds because it received a discount on them from another JPMorgan unit, the SEC said.

At one point in early 2011, JPMorgan invested 47 percent of mutual-fund assets and 35 percent of hedge-fund assets in products and accounts that had ties to it, according to the SEC order.

‘Retrocession Payments’

JPMorgan Chase Bank failed to disclose its preference for third-party funds that shared revenue with the bank, the SEC said. During initial meetings, third-party managers were typically asked if they were willing to share their fees. If they declined, JPMorgan typically would look for an alternative manager who was willing. The bank began disclosing that it may receive these “retrocession” payments in August 2015, the SEC said.

JPMorgan agreed to pay a $40 million civil penalty to the CFTC, which also cited $60 million in disgorgement that was part of the SEC settlement.

The bank’s settlement with the SEC included a penalty component of $127 million. That surpassed the agency’s previous record of $100 million, levied on Alliance Capital Management 11 years ago, according to an SEC spokeswoman.

SEC Waiver

As part of the settlement, JPMorgan received permission to continue raising money for private companies including hedge funds and startups. The bank could have been barred from that lucrative activity based on investor protections that automatically disqualify firms found to have violated securities laws. That so-called waiver came with a condition that JPMorgan hire an independent consultant to annually certify its plan for complying with rules for private fundraising.

A senior bank executive or legal officer will have to certify in writing that they reviewed the consultant’s report. The SEC can revoke the waiver if JPMorgan is found to have repeated the kind of wrongdoing that triggered the latest SEC enforcement action.

“J.P. Morgan put its interest before its clients by failing to disclose significant conflicts of interest,” said Democratic Commissioner Kara Stein, who supported the added waiver restrictions. “These failures were part of an institutional breakdown that operated as a fraud on both its clients and its prospective clients.”

Bloomberg

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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C&I Leasing Announces Delay in Filing 2021 AFS, Q1, 2022

C&I Leasing Plc on Tuesday announced it won’t be filing the 2021 Annual Financial Statements for the year ended December 31 and the Unaudited Financial Statements for the first quarter (Q1) of 2022 due to regulatory delay.

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C&I Leasing Plc on Tuesday announced it won’t be filing the 2021 Annual Financial Statements for the year ended December 31 and the Unaudited Financial Statements for the first quarter (Q1) of 2022 due to regulatory delay.

The company stated in a statement signed by Mbanugo Udenze & CO., Company Secretary of C&I Leasing Plc and obtained by Investors King.

According to C&I Leasing, all plans were made to release the financial statements before the stipulated regulatory filing deadline but the company is “yet to obtain the approval of CBN to proceed to file.”

Therefore, the company accounts are still undergoing review with the Central Bank of Nigeria.

The statement reads, “C&I Leasing Plc (“the Company”) hereby notifies Nigerian Exchange Limited (the Exchange) and the investing public of the delay in the filing of its 2021 Annual Financial Statements for the year ended 31 December 2021 and the Unaudited Financial Statements for the period ended 31 March 2022.

“The Company’s audited accounts are still undergoing review by our primary regulator, the Central Bank of Nigeria (CBN). We had envisaged and made requisite plans in ensuring the approvals for filing was obtained before the stipulated regulatory filing deadline.

“However as at today, we are yet to obtain the approval of CBN to proceed to file.

“Consequently, the Company is also unable to file its Unaudited Financial Statements for the period ended 31 March 2022 as submission of the Audited Financial Statements is a condition precedent to filing of the Company’s Unaudited Financial Statements.

“We understand the importance of the audited report to the Exchange and the general public, and we pledge to file and make them available once they are approved by the Central Bank of Nigeria.”

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IL Bagno Rewards High Performing staff with All-Expense Paid Trip to Dubai

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Victor Nwaogu receiving Ticket from ED Black Pelican

IL Bagno, the leading total interior solutions company in Nigeria, for the world’s leading manufacturers of sanitary fittings, kitchen, tiles, doors, and other interior solutions recently recognised two members of its staff for their high performance and commitment to the success of the organisation.

Bosede Opebiyi and Victor Nwaogu both administration officers at IL Bagno’s Abuja and Lagos office respectively were awarded the IL Bagno excellence award based on a voting process by managers of the organization. They were both presented with a 5 day all-expense paid trip to Dubai and a commendation letter signed by the CEO.

Speaking on the award presentation, Mrs. Adetola Owolabi; Executive Director Black Pelican Group said ‘’as an organisation, we value and reward professionalism and exceptional performance. We voted the winners considered to be the most supportive and representatives of the ethos of hard work, diligence, and professionalism. They both represent the ideals of the company and go over and beyond to support other members of the team to achieve the organisations objectives. Consistent good work never goes unnoticed; I would therefore encourage others to emulate the diligence shown by them’’.

An elated Opebiyi thanked the organization for the kind gesture. ‘’I am proud to be a part of the Black Pelican Group, thank you for recognising my effort, I am motivated to do even more’’.

‘’I am truly humbled by the trust and faith placed in me, I feel compelled to work harder and improve my skills on the job’’ Nwaogu stated.

The debut award will be given twice in a year to deserving staff members voted by managers of The Black Pelican Group.

IL Bagno business is the business unit with the Black pelican Group that provides total interior solutions, it has carved a niche for being the preferred supplier of bathroom and other interior fittings to the most discerning clients and projects. The company recently celebrated its 18th anniversary.

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Former Goldman Sachs Managing Director, Gurbhej Dhillon Joins Flutterwave as New the CTO

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Flutterwave - Investors King

Flutterwave, Africa’s leading payments technology company, today announced the appointment of former Goldman Sachs’ Managing Director, Gurbhej Dhillon as Chief Technology Officer (CTO).

Gurbhej joins at a key time for Flutterwave, following its recently completed Series D funding round, valuing the company at over USD 3 billion, and maintaining its rapid expansion.

As the new CTO, Gurbhej will be responsible for the further development of Flutterwave’s innovative technology platform which currently supports integrations with key technology partners like VISA, Mastercard, Discover Card Networks, and customers like Uber, Flywire, Booking.com etc. He will focus on improving the architecture and infrastructure, as well as providing leadership enabling other engineering and product leaders to create the best solutions that support business growth for customers.

Gurbhej joins Flutterwave from Marcus by Goldman Sachs, where he was the CTO and Head of Lending Engineering. He has extensive experience in enterprise application architecture across financial services and consumer businesses. At Marcus, he was responsible for launching platforms to significantly grow businesses while improving customer experience and established strategic partnerships with several Fortune 500 companies.

Prior to that, Gurbhej was CTO for Goldman Sachs’ Investment Banking Capital Markets team, responsible for the design, architecture, and build-out of strategic platforms that enabled clients to execute equity and debt product offerings.

Gurbhej is a great supporter of the Developer Community in Africa and admires the work they have done in recent times, building creative solutions at a world-class standard.

In his role as CTO of Africa’s leading technology company, Gurbhej hopes to support the Community to attain higher levels.

Olugbenga ‘GB’ Agboola, Founder and CEO of Flutterwave, said: “I look forward to working closely with Gurbhej as we continue to expand rapidly. With the needs of our customers constantly evolving, we remain focused on driving further innovation across the business and continuing to develop our cutting-edge technology platform that simplifies payments and connects the African market with the world. Gurbhej’s experience and deep expertise in developing financial technology platforms will be instrumental in Flutterwave’s further growth.”

Commenting on his appointment, Gurbhej Dhillon said: “I am delighted to be joining the Flutterwave team at such an exciting time for the company. As a leading financial technology company in Africa, Flutterwave is well-positioned to capitalise on the global trends in payment digitisation and continues to drive Africa’s digital transformation, creating further opportunities for customers and merchants alike. It is a very crowded market with lots of new entrants so it is vital that we as a company continually look to innovate our products and services, improve our existing architecture and create endless possibilities for everyone.”

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