JP Morgan To Repurchase Securities, Pay Fine To End NJ Investigation

NEWARK – JP Morgan Chase & Co. will pay a $1.1 million fine to settle a state investigation into the company’s sale of auction-rate securities, New Jersey officials announced today. The firm also agreed to repurchase approximately $91.25 million in securities from individual New Jersey investors.

The state had accused JP Morgan of selling the securities without adequately disclosing the risks of the auction-rate security market.


“New Jersey investors, whose ARS investments were frozen as a result of JPMorgan’s role in these auction market failures, will now regain access to their funds under terms of this settlement,” Attorney General Paula T. Dow said. “Our Bureau of Securities continues to work with other state regulators to protect investors and ensure the return of their monies.”

New Jersey has now entered into Consent Orders with six firms to resolve their conduct in the ARS market. These agreements have generated over $1 billion in repurchases of auction-rate securities for New Jersey investors.

“From the first failed ARS, the Bureau of Securities has sought to secure the necessary relief for investors stuck with these unsuitable and illiquid products,” said Marc B. Minor, New Jersey Bureau of Securities chief. “JPMorgan has agreed to do what’s right by offering to repurchase its clients’ positions, and I fully expect other firms that employed similar practices in marketing and selling these securities in New Jersey to do the same.”

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