* NY lawsuit says funds overpriced, underperforming
* Says brokers got incentives to sell JPM funds
* Case seeks class action status, damages
By Karen Freifeld
NEW YORK, July 16 A former brokerage client has
sued JPMorgan Chase & Co for allegedly steering him and
other investors to overpriced, underperforming funds to boost
the bank's fees and profits.
JPMorgan falsely represented its financial advisers were
operating under fiduciary duty to clients, while its bonuses
encouraged the sale of proprietary funds, according to the
lawsuit, which seeks class action status.
Jennifer Zuccarelli, a spokeswoman for New York-based
JPMorgan Chase, did not immediately return a call seeking
The lawsuit, filed in New York state Supreme Court in
Manhattan, follows a report about JPMorgan's practices published
on July 2 by the New York Times.
According to the lawsuit, JPMorgan's marketing materials
highlighted "inflated, hypothetical returns," while suppressing
a "much less rosy" picture of performance.
JPMorgan, the largest U.S. bank, turned to proprietary funds
and investments to make up for declining profits after the
housing boom burst, according to the lawsuit. The strategy
allowed JPMorgan to collect double fees for management and
sales, it said.
The U.S. Securities and Exchange Commission, Financial
Industry Regulatory Authority and Manhattan District Attorney
are among those investigating JPMorgan's sales practices,
according to the lawsuit.
"We're looking at it," FINRA spokeswoman Nancy Condon said
in an interview.
SEC spokeswoman Judith Burns declined to comment, as did
Joan Vollero, a spokeswoman for the Manhattan District Attorney
The case is Alan H. Tralins v. JPMorgan Chase & Co, New York
state Supreme Court, No. 652448/2012, New York County.