Analysis of JP Morgan Chase's Corporate Responsibility

The assignment involves analyzing JP Morgan Chase's corporate responsibility, specifically their sustainability report, code of conduct, and commitment to community development. It includes reviewing various sources such as news articles, SEC reports, and company documents to understand the bank's stance on environmental, social, and governance (ESG) issues. The analysis will provide insights into the bank's efforts to improve jobs and skills in Detroit, their sustainable financing pledge, and their response to regulatory actions. This assignment requires critical thinking and research skills to evaluate the effectiveness of JP Morgan Chase's corporate responsibility initiatives.

Running head: BUSINESS ETHICS 0
Business
Ethics
JPMorgan Chase
& Company

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Table of Contents
Introduction................................................................................................................................2
JP Morgan Chase & Co..............................................................................................................3
Code of Conduct and Ethics...................................................................................................3
Corporate Social Responsibility (CSR).................................................................................3
ESG Information....................................................................................................................4
News Stories regarding JP Morgan Chase and Co.....................................................................4
SEC database for Ethical Violations..........................................................................................5
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
The United States Securities and Exchange Commission (SEC) is a government
agency which is responsible for overseeing activities such as securities transactions, mutual
fund trading, preventing securities fraud, intentional deception and actions of financial
professionals (SEC, 2018a). This report will make an ethics profile of JP Morgan Chase &
Co which is the largest banking firm the United States. This report will evaluate the code of
ethics, ESG information and corporate social responsibility policies provided on the website
of the company. Secondary research from news stories regarding the company’s ethics will
also be included in the report. Further, the database of SEC will be analysed to determine the
ethical violations made by the corporation.

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JP Morgan Chase & Co
The predecessor of the company “Bank of the Manhattan Company” was founded in
1799, and the firm rebrand itself as JP Morgan Chase & Co in 2000. The headquarters of the
corporation is situated in New York, United States. The firm operates in banking and
financial services industry, and it is world’s sixth largest bank in terms of total assets. The
enterprise offers its services across the globe with assistance from more than 250,000
employees (JP Morgan Chase, 2018a). The subsidiaries of the corporation include J.P.
Morgan Cazenove, Chase Bank, JP Morgan & Co, One Equity Partners and others.
Code of Conduct and Ethics
The code of conduct provides different rules and principles which are followed by the
firm’s executives and employees while making business decisions. The Code emphasised on
the company’s integrity, and the firm focuses on taking ethical actions in order to maintain
their reputation in the market (JP Morgan Chase, 2018b). JP Morgan has established a Code
of Ethics for Finance Professionals which promote the honest and ethical conduct of the
professional by adhering to the law. While maintaining financial books and accounts and
preparing financial statements, the codes are followed by professionals in order to avoid legal
consequences. The code of ethics provided by the firm is supplementary, and they did not
override Employee responsibilities and obligations (JP Morgan Chase, 2018c). Violation of
these policies results in immediate dismissal of the employee. These ethical policies apply to
conduct and reporting requirements of executive officers of the firm as well.
Corporate Social Responsibility (CSR)
JP Morgan Chase has established a unique corporate responsibility approach by
combining a data-driven, strategic focus with different inputs in order to create a lasting
impact on the society. The firm implements global initiatives that focus towards inclusive
growth, long-term bets, and making big decisions by leveraging the firm’s resources,
presence and talent (JP Morgan Chase, 2018d). The four key factors of inclusive growth
include Jobs and skills, Neighbourhood Revitalization, Financial health, and Small business
expansion. The company achieve these goals by leveraging its core business, delivering data
and analysis, investing capital, fostering collaboration and providing skills and expertise (JP
Morgan Chase, 2017).

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Figure 1: Corporate Responsibility Model of JP Morgan Chase & Co
(Source: JP Morgan Chase, 2018d)
ESG Information
The company has integrated Environmental, social and governance (ESG)
information into its business structure for sustainable growth. It promotes transparency and
clarity in operations and focuses on sustaining future growth. The firm has established
different mediums for stakeholder engagement in order to promote sound governance. It
implements different policies for serving customers, supporting communities, investing in
employees and effectively managing operations (JP Morgan Chase, 2016).
News Stories regarding JP Morgan Chase and Co
The company has been in the news many times while complying with its CSR
responsibilities. Following are different investments and charities funded by the company for
fulfilling its CSR activities.
 Donated $1 million to support Hurricane Irma Relief Efforts (Wattles, 2017).
 It announced to invest $200 billion for becoming 100 percent reliant on renewable
energy by 2020 (Frangoul, 2017).
 Commits over $1.3 million for increasing job growth and skills training in Detroit
(Dolan, 2016).

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 Donated $200 thousand for helping Italy Earthquake Relief efforts (CSR Vision,
2016).
 Invested $125 million in the five-year initiative for providing Economic opportunities
in disadvantaged neighbourhoods (Kinney, 2016).
In many other situations, the company has failed to comply with ethical standards, and it
breached the regulations of the SEC. Following are different incidents in which the firm has
been in the news due to ethical issues.
 In 2016, the firm agrees to pay a fine for $264 million for violating the regulations of
Foreign Corrupt Practices Act (FCPA). From 2006 to 2013, the company was hiring
hundreds of interns and employees based on the request of government officials in
China and Asia. Due to this program, the firm generated $100 million in revenue from
the program called “Sons and Daughters Program”. In 2016, the SEC issued an order
that accused the company of bypassing its normal hiring process and giving jobs to
candidates that are referred by clients (Gara, 2016).
 In 2011, the SEC ordered the company to pay a fine of $153.6 million for charges of
misleading investors by using complex mortgage securities transaction in 2007
(Stempel & Lynch, 2011).
 In July 2017, charges were dropped against former JP Morgan Chase traders who
were suspected to be involved in ‘London Whale’ incident which caused $6.2 billion
of losses in 2012 (The Guardian, 2017).
 In 2008, the company conducted deceitful activities by giving housing loans to people
without checking their documents which triggered the 2008 financial crash. The
corporation was ordered to pay a fine of $5.3 billion from which $1.1 billion in cash
and $4.2 billion in the form of financial relief to homeowners. In 2017, it was found
that the firm was cancelling loans from the penalties of homeowners. But, the
company did not own such mortgages since it sold them to third-party investors
(Dayen, 2017).
SEC database for Ethical Violations
Following are different cases in which JP Morgan Chase was penalized for violating SEC
regulations.

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 In 2015, the SEC charged a fine of $267 million on JP Morgan Chase & Co for non-
compliance with disclosure regulations which conflict the interest of its clients (SEC,
2015).
 In 2013, the SEC charged the firm a fine of $200 million for misstating financial
results and failing to detect and prevent its traders from overvaluing investments to
conceal millions in trading losses (SEC, 2013).
 In 2016, the firm settled FCPA charges for violating its hiring policies by paying a
fine of $264 million (SEC, 2016).
 In 2011, the SEC charged the company a fine of $153.6 million for misleading
investors which resulted in causing them financial loss (SEC, 2011).

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Conclusion
In conclusion, the firm has established an effective code of conduct, ESG information
and Corporate Social Responsibility model for ensuring that its executives and employees
perform their actions ethically and maintain integrity in the firm. The corporation focuses on
ethically performing its duties while using its resources for developing local communities and
developing skills of its employees. However, there have been a number of incidents in which
the firm has failed to ethically perform its duties which resulted in negatively affecting a
number of people. The SEC has penalized the corporation many times for violating and non-
complying with its regulations. These penalties show that the company is required to improve
its code of conduct and CSR structure for ensuring that employees and executives did not
indulge in unethical activities. Effective compliance with the code of conduct and corporate
social responsibilities can improve the overall reputation of the firm which can assist in
sustaining its future growth.

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References
CSR Vision. (2016). JPMORGAN Chase Donates $200,000 to Aid Italy Earthquake Relief
Efforts. Retrieved from http://www.csrvision.in/jpmorgan-chase-donates-200000-to-
aid-italy-earthquake-relief-efforts/
Dayen, D. (2017). Special Investigation: How America’s Biggest Bank Paid Its Fine for the
2008 Mortgage Crisis—With Phony Mortgages!. Retrieved from
https://www.thenation.com/article/how-americas-biggest-bank-paid-its-fine-for-the-
2008-mortgage-crisis-with-phony-mortgages/
Dolan, M. (2016). Chase details how it invests $1.3M to improve jobs skills in Detroit.
Retrieved from
https://www.freep.com/story/money/business/michigan/2016/09/27/chase-details-
how-invests-13m-improve-jobs-skills-detroit/91178558/
Frangoul, A. (2017). Banking giant makes $100 billion sustainable financing pledge.
Retrieved from https://www.cnbc.com/2017/11/06/banking-giant-makes-100-billion-
sustainable-financing-pledge.html
Gara, A. (2016). JPMorgan Agrees To Pay $264 Million Fine For 'Sons And Daughters'
Hiring Program In China. Retrieved from
https://www.forbes.com/sites/antoinegara/2016/11/17/jpmorgan-agrees-to-pay-264-
million-fine-for-sons-and-daughters-hiring-program-in-china/#74cb72156881
JP Morgan Chase. (2016). Environmental Social and Governance Report. Retrieved from
https://www.jpmorganchase.com/corporate/Corporate-Responsibility/document/jpmc-
cr-esg-report-2016.pdf
JP Morgan Chase. (2017). Corporate Responsibility Report May 2017. Retrieved from
https://www.jpmorganchase.com/corporate/Corporate-Responsibility/document/2016-
JPMorgan-Chase-CR-Report.pdf
JP Morgan Chase. (2018a). About Us. Retrieved from
https://www.jpmorganchase.com/corporate/About-JPMC/about-us.htm

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JP Morgan Chase. (2018b). Code of Conduct and Code of Ethics for Finance Professionals.
Retrieved from https://www.jpmorganchase.com/corporate/About-JPMC/ab-code-of-
ethics.htm
JP Morgan Chase. (2018c). Code of Conduct. Retrieved from
https://www.jpmorganchase.com/corporate/About-JPMC/document/CodeofConduct_
2010Edition.pdf
JP Morgan Chase. (2018d). Corporate Responsibility. Retrieved from
https://www.jpmorganchase.com/corporate/Corporate-Responsibility/corporate-
responsibility.htm
Kinney, J. (2016). JPMorgan to Support CDFI Collaboration. Retrieved from
https://nextcity.org/daily/entry/jpmorgan-fund-community-dvelopment-cities-cdfis
SEC. (2011). J.P. Morgan to Pay $153.6 Million to Settle SEC Charges of Misleading
Investors in CDO Tied to U.S. Housing Market. Retrieved from
https://www.sec.gov/news/press/2011/2011-131.htm
SEC. (2013). JPMorgan Chase Agrees to Pay $200 Million and Admits Wrongdoing to Settle
SEC Charges. Retrieved from https://www.sec.gov/news/press-release/2013-187
SEC. (2015). J.P. Morgan to Pay $267 Million for Disclosure Failures. Retrieved from
https://www.sec.gov/news/pressrelease/2015-283.html
SEC. (2016). JPMorgan Chase Paying $264 Million to Settle FCPA Charges. Retrieved from
https://www.sec.gov/news/pressrelease/2016-241.html
SEC. (2018a). About the SEC. Retrieved from https://www.sec.gov/about.shtml
Stempel, J. & Lynch, S.N. (2011). JPMorgan to pay $153.6 million in SEC fraud case.
Retrieved from
https://www.reuters.com/article/us-jpmorgan-sec-settlement/jpmorgan-to-pay-153-6-
million-in-sec-fraud-case-idUSTRE75K5A420110621
The Guardian. (2017). 'London Whale' charges dropped against former JP Morgan traders.
Retrieved from https://www.theguardian.com/business/2017/jul/22/london-whale-
charges-dropped-against-former-jp-morgan-traders

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Wattles, J. (2017). Here's what big companies are giving for Irma relief. Retrieved from
http://money.cnn.com/2017/09/11/news/companies/corporate-donations-hurricane-
relief/index.html