The Securities and Exchange Commission today announced that J.P. Morgan's brokerage business agreed to pay $4 million to settle charges that it falsely stated on its private banking website and in marketing materials that advisors are compensated "based on our clients' performance; no one is paid on commission."

"JPMS misled customers into believing their brokers had skin in the game and were being compensated based on the success of customer portfolios. But none of the factors JPMS used to determine broker compensation was tied to portfolio performance," said Andrew J. Ceresney, Director of the SEC Enforcement Division.

Source: www.sec.gov

According to the SEC's order instituting a settled administrative proceeding:

• JPMS made the false and misleading statement about broker compensation from 2009 to 2012.

• The misstatement was made to current and prospective customers on JPMS’ private banking website as well as a private banking website for its Tampa regional office.

• Among the marketing materials that included the misstatement were a prospecting card, a pitch book, and a marketing letter.

• JPMS employees identified the broker compensation statement as inaccurate on four occasions from March 2009 to February 2011. But JPMS failed to correct the misstatement on each of those occasions.

• It wasn't until May 2012 — more than three years after it was first made — that the misstatement was corrected by JPMS in some marketing materials.