J.P. Morgan hit with record U.K. fine

Dick Taffe — Thu, 03 Jun 2010 16:26:33 +0000

British regulators fined investment bank J.P. Morgan Chase a record $48 million for failing to keep client money separate from the firm’s money — from 2002 when Morgan merged with Chase until mid-2009 — which put client money at risk had the company gone insolvent. Law Professor Tamar Frankel, an authority on securities law and author of “Trust and Honesty: America’s business Culture at a Crossroad,” reminds that client money cannot be viewed as the bank’s own.

“The money that clients deposit with a bank to trade on behalf of clients as brokers or any other form of a fiduciary relationship continues to belong to the client — therefore, it cannot be mixed with the bank’s money.”

Contact Tamar Frankel, 617-353-3773, tfrankel@bu.edu

Fiduciary and investment banks

Dick Taffe — Wed, 05 May 2010 16:32:40 +0000

On the heels of allegations that Goldman Sachs took advantage of clients during the mortgage-market collapse, Congress reportedly is considering new legal standards for investment banks when they deal with customers. Law Professor Tamar Frankel, an authority on securities law and author of “Trust and Honesty: America’s Business Culture at a Crossroad,” says slapping fiduciary duties on investment bankers would prevent them from acting for their own benefit at the expense of the investors.

“The result may be that brokers and investment bankers will innovate less for their own benefit and might even, God forbid, earn less. But the financial system will be less subject to bubbles and crashes, so investors might earn less but they’ll also lose less.”

Contact Tamar Frankel, 617-353-3773, tfrankel@bu.edu

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J.P. Morgan hit with record U.K. fine

Fiduciary and investment banks