A former brokerage client has sued JPMorgan Chase & Co for allegedly steering him and other investors to overpriced, underperforming funds to boost the bank's fees and profits.
JPMorgan falsely represented its financial advisers were operating under fiduciary duty to clients, while its bonuses encouraged the sale of proprietary funds, according to the lawsuit, which seeks class action status.
Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan Chase, did not immediately return a call seeking comment.
The lawsuit, filed in New York state Supreme Court in Manhattan, follows a report about JPMorgan's practices published on July 2 by the New York Times.
According to the lawsuit, JPMorgan's marketing materials highlighted "inflated, hypothetical returns," while suppressing a "much less rosy" picture of performance.
JPMorgan, the largest U.S. bank, turned to proprietary funds and investments to make up for declining profits after the housing boom burst, according to the lawsuit. The strategy allowed JPMorgan to collect double fees for management and sales, it said.
The U.S. Securities and Exchange Commission, Financial Industry Regulatory Authority and Manhattan District Attorney are among those investigating JPMorgan's sales practices, according to the lawsuit.
"We're looking at it," FINRA spokeswoman Nancy Condon said in an interview.
SEC spokeswoman Judith Burns declined to comment, as did Joan Vollero, a spokeswoman for the Manhattan District Attorney Cyrus Vance.
The case is Alan H. Tralins v. JPMorgan Chase & Co, New York state Supreme Court, No. 652448/2012, New York County. (Reporting by Karen Freifeld; editing by Eddie Evans and Andre Grenon)
Copyright 2012 Thomson Reuters. All rights reserved.