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
