Different sectors across a country are comprised of different elements. All these elements are required to work in collaboration for the final product of a sector to be upto the mark. Nevertheless, when we talk about the elements in question, we often get hung up on things like investments, volume of big players, prices, demand etc. What we fail to recognize are some of the external yet equally important elements that orchestrate the activities within these sectors, ensuring a level playing-field and a neater environment. One such overlooked element often tends to be the regulatory bodies. Nations with aims of higher and sustainable growth understand the requirement to govern different sectors in a way that encourages inclusivity and a competitive environment. In addition, this governance has a lot to with making sure that all the practices sector is undertaking align with certain ethical obligations, which are very much universal in nature. Now, it doesn’t take an expert to realize that governance becomes an even more of a crucial factor when the discussion is about financial workings due to greater significance of the sector in the country’s economy. Hence, several regulatory bodies are set up to maintain a close eye on different aspects of the financial industry. The room of error for the companies is really small, as these government watchdogs never cease to be on lookout for any discrepancies. This was reinforced yet again when Security and Exchange Commission slapped a JP Morgan subsidiary, Neovest, with a fine worth $2.75 million. This fine comes in the light of a revelation that the subsidiary had violated the security laws.
SEC went on to give a full breakdown of how Neovest ended up with a serious violation on its hands. According to SEC’s report, Neovest had deregistered itself as a broker-dealer after JP officially acquired it in 2005. However, as per an investigation, it has continued to run operations, mostly serving institutional clients. Facilitating stock and options trades despite not being registered has landed Neovest and its parent company, JP Morgan in hot waters. JP Morgan is receiving criticism mainly because its middle-man role in the violation, as it would receive the fee Neovest was owed from its clients before routing it back to the subsidiary.
Neovest hasn’t admitted or refuted the allegations, but they have accepted to pay the fine.