JPMorgan Securities will pay $18 million to settle charges by the Securities and Exchange Commission that it stopped advisory clients and brokerage customers from reporting potential violations to the SEC.

For more than three years, between March 2020 and July 2023, JPMS allegedly asked clients to sign non-disclosure agreements if they’d been issued a credit or settlement above $1,000 from JPMS.

Per SEC investigation, such agreements required the clients to keep quiet the settlement and all facts surrounding it. While the agreements allowed clients to communicate with the SEC, clients weren’t allowed to contact the SEC first. Instead, they could only communicate with the SEC if the agency inquired to them.

This, according to the SEC, is in violation of a whistleblower protection rule.

“Whether it’s in your employment contracts, settlement agreements or elsewhere, you simply cannot include provisions that prevent individuals from contacting the SEC with evidence of wrongdoing,” Gurbir Grewal, director of the SEC’s Division of Enforcement, said in a statement. “But that’s exactly what we allege J.P. Morgan did here.”

“For several years, it forced certain clients into the untenable position of choosing between receiving settlements or credits from the firm and reporting potential securities law violations to the SEC,” Grewal said. “This either-or proposition not only undermined critical investor protections and placed investors at risk, but was also illegal.”

JPMS did not admit or deny any wrongdoing in its agreement to pay $18 million, though it agreed to cease and desist from violating the whistleblower protection rule.

A JPMS spokesperson told Banking Dive that the firm “take[s] our regulatory obligations seriously and promptly took action to resolve this issue.”