In re J.P. MORGAN
summary
J.P. Morgan Investment Management Inc. violated Rule 105 of Regulation M by short-selling equity securities during restricted periods and purchasing shares in ten follow-on offerings between 2009 and 2012, generating $662,763 in illicit profits, and agreed to pay $1,084,210.40 in disgorgement, interest, and a civil penalty without admitting or denying wrongdoing.
paragraph
Between October 2009 and September 2012, J.P. Morgan Investment Management Inc. (JPMIM) engaged in ten violations of Rule 105 of Regulation M by short-selling stocks such as AIG and ARE during restricted periods and then purchasing shares in subsequent follow-on offerings at discounted prices, resulting in $662,763 in illicit profits. The SEC found that JPMIM’s conduct, though not requiring proof of intent, undermined market integrity by distorting offering prices, and accepted a settlement in which JPMIM consented to a cease-and-desist order without admitting or denying the allegations. JPMIM agreed to disgorge $662,763 in profits, pay $56,758 in prejudgment interest, and a $364,689 civil penalty, totaling $1,084,210.40, while the SEC noted its cooperation and remedial measures as mitigating factors.
narrative
J.P. Morgan Investment Management Inc. (JPMIM), a New York-based registered investment adviser with $1.15 trillion in assets under management, violated Rule 105 of Regulation M on ten occasions between October 2009 and September 2012 by selling short equity securities during the restricted period and then purchasing shares in follow-on public offerings from underwriters. These violations, which included trades in AIG and Alexandria Real Estate Equities, generated $662,763 in illicit profits by exploiting the price differential between short-sale proceeds and discounted offering prices, with one instance involving AIG yielding $27,003.56 in profits alone. Rule 105 prohibits such conduct regardless of intent, as it distorts market dynamics and undermines the fairness of public offerings, a principle the SEC emphasized in its 2007 adoption of the rule. JPMIM consented to a cease-and-desist order without admitting or denying the findings, except for jurisdiction, and agreed to disgorge all illicit profits of $662,763, pay $56,758 in prejudgment interest, and a $364,689 civil penalty, totaling $1,084,210.40. The SEC accepted the settlement in part due to JPMIM’s cooperation during the investigation and its implementation of remedial measures to prevent future violations. The order explicitly states that any civil penalties from related private actions do not reduce the penalty imposed here. JPMIM’s conduct, though not alleged to be intentionally manipulative, still violated the prophylactic nature of Rule 105, reinforcing the SEC’s stance that market integrity requires strict adherence to structural safeguards.
Classified market-manipulation(confidence 100%). EDGAR detection: forms SC 13D/G/13F· recall 53% / precision 9%. detection rule →
Statutes
31 U.S.C. § 371717 C.F.R. § 242.10517 C.F.R. § 242.105(a)SECTION 21C OF THE SECURITIES EXCHANGE ACT
Parties
Securities and Exchange CommissionJ.P. MORGAN INVESTMENT MANAGEMENT INC.
Keywords
jpmimofferingsharesrestricted periodreceivedrespondentshortpriceperiodrestrictedsold shortjpmim soldcommissionsecurities exchangefollow-on offering
Extracted insights
Dollar amounts 30
- $1150.00B $1.15 trillion ≥$1B
- $1.08M $1,084,210 $1M–$10M
- $1.00M $1,000,000 $1M–$10M
- $663K $662,763 $100K–$1M
- $365K $364,689 $100K–$1M
- $222K $222,029 $100K–$1M
- $195K $194,848 $100K–$1M
- $180K $179,775 $100K–$1M
- $87K $86,669 $10K–$100K
- $85K $84,826 $10K–$100K
- $72K $72,423 $10K–$100K
- $71K $70,886 $10K–$100K
Entities 4
- company j.p. morgan investment management inc.
- agency the securities and exchange commission
- person these proceedings
- person these violations
Triples 9
- The Securities and Exchange Commission deems appropriate cease-and-desist proceedings be instituted
- Respondent has submitted an Offer of Settlement
- Respondent consents to the entry this Order Instituting Cease-and-Desist Proceedings
- These proceedings arise out of violations of Rule 105 of Regulation M of the Exchange Act
- JPMIM bought offering shares from an underwriter or broker or dealer participating in a follow-on public offering
- These violations resulted in profits of $662,763
- J.P. Morgan Investment Management Inc. is a corporation organized under the laws of Delaware
- JPMIM is a registered investment adviser with approximately $1.15 trillion in assets under management
- Rule 105 makes it unlawful for a person to purchase equity securities in certain public offerings
PDF
Text layers
Extracted body text (15,828c)
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 76143 / October 14, 2015
ADMINISTRATIVE PROCEEDING
File No. 3-16897
In the Matter of
J.P. MORGAN
INVESTMENT
MANAGEMENT INC.
Respondent.
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER AND CIVIL
PENALTY
I.
The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
Exchange Act of 1934 (“Exchange Act”), against J.P. Morgan Investment Management Inc.
(“JPMIM” or “Respondent”).
II.
In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the
purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over it and the subject matter of these
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making
Findings, and Imposing a Cease-and-Desist Order and Civil Penalty (“Order”), as set forth below.
2
III.
On the basis of this Order and Respondent’s Offer, the Commission finds
1
that:
Summary
1. These proceedings arise out of violations of Rule 105 of Regulation M of the
Exchange Act by JPMIM, a New York-based registered investment adviser. Rule 105 prohibits
selling short an equity security that is the subject of certain public offerings and purchasing the
offered security from an underwriter or broker or dealer participating in the offering, if such short
sale was effected during the restricted period as defined therein.
2. On ten occasions, from October 2009 through September 2012, JPMIM bought
offering shares from an underwriter or broker or dealer participating in a follow-on public offering
after having sold short the same security during the restricted period. These violations collectively
resulted in profits of $662,763.
Respondent
3. J.P. Morgan Investment Management Inc. is a corporation organized under the
laws of Delaware with its principal office in New York, New York. JPMIM is a registered
investment adviser, with approximately $1.15 trillion in assets under management. The trading
described herein refers to trading on behalf of certain client accounts of JPMIM, or, in some
cases, of certain affiliates, advised by portfolio managers employed by JPMIM. As used in
paragraphs 6-15, the terms “JPMIM” and “Respondent” refer to JPMIM or the relevant affiliate.
Legal Framework
4. Rule 105 makes it unlawful for a person to purchase equity securities in certain
public offerings from an underwriter, broker, or dealer participating in the offering if that person
sold short the security that is the subject of the offering during the restricted period defined in the
rule, absent an exception. 17 C.F.R. § 242.105; see Short Selling in Connection with a Public
Offering, Rel. No. 34-56206, 72 Fed. Reg. 45094 (Aug. 10, 2007) (effective Oct. 9, 2007). The
Rule 105 restricted period is the shorter of the period: (1) beginning five business days before the
pricing of the offered securities and ending with such pricing; or (2) beginning with the initial
filing of a registration statement or notification on Form 1-A or Form 1-E and ending with the
pricing. 17 C.F.R. § 242.105(a)(1) and (a)(2).
5. The Commission adopted Rule 105 “to foster secondary and follow-on offering
prices that are determined by independent market dynamics and not by potentially manipulative
1
The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other person
or entity in this or any other proceeding.
3
activity.” 72 Fed. Reg. 45094. Rule 105 is prophylactic and prohibits the conduct irrespective of
the short seller’s intent in effecting the short sale. Id.
JPMIM’s Violations of Rule 105 of Regulation M
6. On September 6, 2012, JPMIM sold short 450 shares of American International
Group, Inc. (“AIG”) during the restricted period at a price of $34.2211 per share. On September
10, 2012, AIG priced a follow-on offering of its common stock at $32.50 per share. JPMIM
received an allocation that included 54,732 shares in that offering. The difference between
JPMIM’s proceeds received from the restricted period short sales of AIG shares and the price paid
for 450 shares received in the offering was $774.50. Respondent also improperly received a
benefit of $26,229.06 by purchasing the remaining 54,282 shares at a discount from AIG’s market
price. Thus, JPMIM’s participation in the 2012 AIG offering resulted in total profits of
$27,003.56.
7. On September 15, 2010, JPMIM sold short 4,100 shares of Alexandria Real Estate
Equities, Inc. (“ARE”) during the restricted period at a price of $72.06 per share. On September
22, 2010, ARE priced a follow-on offering of its common stock at $69.25 per share. JPMIM
received an allocation that included 13,803 shares in that offering. The difference between
JPMIM’s proceeds received from the restricted period short sales of ARE shares and the price paid
for 4,100 shares received in the offering was $11,521. Respondent also improperly received a
benefit of $8,758.90 by purchasing the remaining 9,703 shares at a discount from ARE’s market
price. Thus, JPMIM’s participation in the 2010 ARE offering resulted in total profits of
$20,279.90.
8. On January 9, 2012, JPMIM sold short 7,200 shares of DDR Corp (“DDR”) during
the restricted period at a price of $12.5925 per share. On January 12, 2012, DDR priced a follow-
on offering of its common stock at $12.95 per share. JPMIM received an allocation that included
447,735 shares in that offering. Although the offering price was greater than the price at which
JPMIM sold short during the restricted period, JPMIM improperly received a benefit of
$194,848.63 by purchasing the remaining 440,535 shares at a discount from DDR’s market price.
Thus, JPMIM’s participation in the 2012 DDR offering resulted in total profits of $194,848.63.
9. On June 21, 2012 and June 22, 2012, JPMIM sold short a total of 860 shares of Digital
Realty Trust, Inc. (“DLR”) during the restricted period at an average price of $74.0365 per share.
On June 26, 2012, DLR priced a follow-on offering of its common stock at $72.25 per share.
JPMIM received an allocation that included 140,236 shares in that offering. The difference
between JPMIM’s proceeds received from the restricted period short sales of DLR shares and the
price paid for 860 shares received in the offering was $1,536.39. Respondent also improperly
received a benefit of $70,886.63 by purchasing the remaining 139,376 shares at a discount from
DLR’s market price. Thus, JPMIM’s participation in the 2012 DLR offering resulted in total
profits of $72,423.02.
4
10. On October 28, 2010 and November 2, 2010, JPMIM sold short a total of 34,800
shares of HCP, Inc. (“HCP”) during the restricted period at an average price of $36.4642. On
November 3, 2010, HCP priced a follow-on offering of its common stock at $35.25 per share.
JPMIM received an allocation that included 383,000 shares in that offering. The difference
between JPMIM’s proceeds received from the restricted period short sales of HCP shares and the
price paid for 34,800 shares received in the offering was $42,254.16. Respondent also improperly
received a benefit of $179,775.66 by purchasing the remaining 348,200 shares at a discount from
HCP’s market price. Thus, JPMIM’s participation in the 2010 HCP offering resulted in total
profits of $222,029.82.
11. On April 12, 2010 and April 14, 2010, JPMIM sold short a total of 20,700 shares of
The Macerich Company (“MAC”) during the restricted period at an average price of $42.3662 per
share. On April 15, 2010, MAC priced a follow-on offering of its common stock at $41 per share.
JPMIM received an allocation that included 28,330 shares in that offering. The difference between
JPMIM’s proceeds received from the restricted period short sales of MAC shares and the price
paid for 20,700 shares received in the offering was $28,280.34. Thus, JPMIM’s participation in
the 2010 MAC offering resulted in total profits of $28,280.34.
12. On September 14, 2012 and September 17, 2012, JPMIM sold short a total of 680
shares of Health Care REIT Inc. (“HCN”) during the restricted period at an average price of
$58.7106 per share. On September 18, 2012, HCN priced a follow-on offering of its common
stock at $56 per share. JPMIM received an allocation that included 82,900 shares in that offering.
The difference between JPMIM’s proceeds received from the restricted period short sales of HCN
shares and the price paid for 680 shares received in the offering was $1,843.21. Respondent also
improperly received a benefit of $84,826.37 by purchasing the remaining 82,220 shares at a
discount from HCN’s market price. Thus, JPMIM’s participation in the 2012 HCN offering
resulted in total profits of $86,669.58.
13. On July 31, 2012, JPMIM sold short 650 shares of Taubman Centers, Inc. (“TCO”)
during the restricted period at a price of $77.1823 per share. On August 1, 2012, TCO priced a
follow-on offering of its common stock at $76 per share. JPMIM received an allocation that
included 2,700 shares in that offering. The difference between JPMIM’s proceeds received from
the restricted period short sales of TCO shares and the price paid for 650 shares received in the
offering was $768.49. Respondent also improperly received a benefit of $3,878.81 by purchasing
the remaining 2,050 shares at a discount from TCO’s market price. Thus, JPMIM’s participation
in the 2012 TCO offering resulted in total profits of $4,647.30.
14. On October 14, 2011, JPMIM sold short 1,300 shares of Equity Lifestyle
Properties, Inc. (“ELS”) during the restricted period at a price of $64.22 per share. On October 20,
2011, ELS priced a follow-on offering of its common stock at $60.70 per share. JPMIM received
an allocation that included 111,140 shares in that offering. The difference between JPMIM’s
proceeds received from the restricted period short sales of ELS shares and the price paid for 1,300
shares received in the offering was $4,576. Thus, JPMIM’s participation in the 2011 ELS offering
resulted in total profits of $4,576.
5
15. On October 12, 2009, JPMIM sold short 20,900 shares of CBS Corporation
(“CBS”) during the restricted period at an average price of $12.0885. On October 14, 2009, CBS
priced a follow-on offering of its common stock at $12 per share. JPMIM received an allocation
that included 21,100 shares in that offering. The difference between JPMIM’s proceeds received
from the restricted period short sales of CBS shares and the price paid for 20,900 shares received in
the offering was $1,849.65. Respondent also improperly received a benefit of $155.26 by
purchasing the remaining 200 shares at a discount from CBS’ market price. Thus, JPMIM’s
participation in the 2009 CBS offering resulted in total profits of $2,004.91.
16. In total, JPMIM’s violations of Rule 105 resulted in profits of $662,763.
Violations
17. As a result of the conduct described above, JPMIM violated Rule 105 of Regulation
M under the Exchange Act.
JPMIM’s Remedial Efforts & Cooperation
18. In determining to accept the Offer, the Commission considered remedial acts
promptly undertaken by Respondent and cooperation afforded to Commission staff.
IV.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent JPMIM’s Offer.
Accordingly, it is hereby ORDERED that:
A. Pursuant to Section 21C of the Exchange Act, Respondent JPMIM cease and desist
from committing or causing any violations and any future violations of Rule 105 of Regulation M of
the Exchange Act;
B. JPMIM shall within fourteen (14) days of the entry of this Order, pay disgorgement
of $662,763, prejudgment interest of $56,758.40, and a civil money penalty in the amount of
$364,689 (for a total of $1,084,210.40) to the Securities and Exchange Commission for transfer to
the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If
timely payment is not made on the disgorgement amount, additional interest shall accrue pursuant
to SEC Rule of Practice 600. If timely payment is not made on the civil money penalty, additional
interest shall accrue pursuant to 31 U.S.C. § 3717.
6
Payments must be made in one of the following ways:
(1) Respondent may transmit payment electronically to the Commission, which will
provide detailed ACH transfer/Fedwire instructions upon request;
2
(2) Respondent may make direct payment from a bank account via Pay.gov through the
SEC website at http://www.sec.gov/about/offices/ofm.htm; or
(3) Respondent may pay by certified check, bank cashier’s check, or United States postal
money order, made payable to the Securities and Exchange Commission and hand-
delivered or mailed to:
Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
Payments by check or money order must be accompanied by a cover letter identifying
JPMIM as a Respondent in these proceedings, and the file number of these proceedings; a copy of
the cover letter and check or money order must be sent to Gerald W. Hodgkins, Associate Director,
Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington,
DC 20549.
2
The minimum threshold for transmission of payment electronically is $1,000,000. For amounts below the
threshold, respondents must make payments pursuant to options (2) or (3) above.
7
C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be
treated as penalties paid to the government for all purposes, including all tax purposes. To
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Action, it
shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of
compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in
this action ("Penalty Offset"). If the court in any Related Action grants such a Penalty Offset,
Respondent agrees that it shall, within 30 days after entry of a final order granting the Penalty
Offset, notify the Commission's counsel in this action and pay the amount of the Penalty Offset to
the Securities and Exchange Commission. Such a payment shall not be deemed an additional civil
penalty and shall not be deemed to change the amount of the civil penalty imposed in this
proceeding. For purposes of this paragraph, a “Related Action” means a private damages action
brought against Respondent based on substantially the same facts as alleged in the Order instituted
by the Commission in this proceeding.
By the Commission.
Brent J. Fields
Secretary
OCR text (16,084c · tika · 95% conf)
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 76143 / October 14, 2015
ADMINISTRATIVE PROCEEDING
File No. 3-16897
In the Matter of
J.P. MORGAN
INVESTMENT
MANAGEMENT INC.
Respondent.
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER AND CIVIL
PENALTY
I.
The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
Exchange Act of 1934 (“Exchange Act”), against J.P. Morgan Investment Management Inc.
(“JPMIM” or “Respondent”).
II.
In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the
purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over it and the subject matter of these
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making
Findings, and Imposing a Cease-and-Desist Order and Civil Penalty (“Order”), as set forth below.
2
III.
On the basis of this Order and Respondent’s Offer, the Commission finds1 that:
Summary
1. These proceedings arise out of violations of Rule 105 of Regulation M of the
Exchange Act by JPMIM, a New York-based registered investment adviser. Rule 105 prohibits
selling short an equity security that is the subject of certain public offerings and purchasing the
offered security from an underwriter or broker or dealer participating in the offering, if such short
sale was effected during the restricted period as defined therein.
2. On ten occasions, from October 2009 through September 2012, JPMIM bought
offering shares from an underwriter or broker or dealer participating in a follow-on public offering
after having sold short the same security during the restricted period. These violations collectively
resulted in profits of $662,763.
Respondent
3. J.P. Morgan Investment Management Inc. is a corporation organized under the
laws of Delaware with its principal office in New York, New York. JPMIM is a registered
investment adviser, with approximately $1.15 trillion in assets under management. The trading
described herein refers to trading on behalf of certain client accounts of JPMIM, or, in some
cases, of certain affiliates, advised by portfolio managers employed by JPMIM. As used in
paragraphs 6-15, the terms “JPMIM” and “Respondent” refer to JPMIM or the relevant affiliate.
Legal Framework
4. Rule 105 makes it unlawful for a person to purchase equity securities in certain
public offerings from an underwriter, broker, or dealer participating in the offering if that person
sold short the security that is the subject of the offering during the restricted period defined in the
rule, absent an exception. 17 C.F.R. § 242.105; see Short Selling in Connection with a Public
Offering, Rel. No. 34-56206, 72 Fed. Reg. 45094 (Aug. 10, 2007) (effective Oct. 9, 2007). The
Rule 105 restricted period is the shorter of the period: (1) beginning five business days before the
pricing of the offered securities and ending with such pricing; or (2) beginning with the initial
filing of a registration statement or notification on Form 1-A or Form 1-E and ending with the
pricing. 17 C.F.R. § 242.105(a)(1) and (a)(2).
5. The Commission adopted Rule 105 “to foster secondary and follow-on offering
prices that are determined by independent market dynamics and not by potentially manipulative
1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other person
or entity in this or any other proceeding.
3
activity.” 72 Fed. Reg. 45094. Rule 105 is prophylactic and prohibits the conduct irrespective of
the short seller’s intent in effecting the short sale. Id.
JPMIM’s Violations of Rule 105 of Regulation M
6. On September 6, 2012, JPMIM sold short 450 shares of American International
Group, Inc. (“AIG”) during the restricted period at a price of $34.2211 per share. On September
10, 2012, AIG priced a follow-on offering of its common stock at $32.50 per share. JPMIM
received an allocation that included 54,732 shares in that offering. The difference between
JPMIM’s proceeds received from the restricted period short sales of AIG shares and the price paid
for 450 shares received in the offering was $774.50. Respondent also improperly received a
benefit of $26,229.06 by purchasing the remaining 54,282 shares at a discount from AIG’s market
price. Thus, JPMIM’s participation in the 2012 AIG offering resulted in total profits of
$27,003.56.
7. On September 15, 2010, JPMIM sold short 4,100 shares of Alexandria Real Estate
Equities, Inc. (“ARE”) during the restricted period at a price of $72.06 per share. On September
22, 2010, ARE priced a follow-on offering of its common stock at $69.25 per share. JPMIM
received an allocation that included 13,803 shares in that offering. The difference between
JPMIM’s proceeds received from the restricted period short sales of ARE shares and the price paid
for 4,100 shares received in the offering was $11,521. Respondent also improperly received a
benefit of $8,758.90 by purchasing the remaining 9,703 shares at a discount from ARE’s market
price. Thus, JPMIM’s participation in the 2010 ARE offering resulted in total profits of
$20,279.90.
8. On January 9, 2012, JPMIM sold short 7,200 shares of DDR Corp (“DDR”) during
the restricted period at a price of $12.5925 per share. On January 12, 2012, DDR priced a follow-
on offering of its common stock at $12.95 per share. JPMIM received an allocation that included
447,735 shares in that offering. Although the offering price was greater than the price at which
JPMIM sold short during the restricted period, JPMIM improperly received a benefit of
$194,848.63 by purchasing the remaining 440,535 shares at a discount from DDR’s market price.
Thus, JPMIM’s participation in the 2012 DDR offering resulted in total profits of $194,848.63.
9. On June 21, 2012 and June 22, 2012, JPMIM sold short a total of 860 shares of Digital
Realty Trust, Inc. (“DLR”) during the restricted period at an average price of $74.0365 per share.
On June 26, 2012, DLR priced a follow-on offering of its common stock at $72.25 per share.
JPMIM received an allocation that included 140,236 shares in that offering. The difference
between JPMIM’s proceeds received from the restricted period short sales of DLR shares and the
price paid for 860 shares received in the offering was $1,536.39. Respondent also improperly
received a benefit of $70,886.63 by purchasing the remaining 139,376 shares at a discount from
DLR’s market price. Thus, JPMIM’s participation in the 2012 DLR offering resulted in total
profits of $72,423.02.
4
10. On October 28, 2010 and November 2, 2010, JPMIM sold short a total of 34,800
shares of HCP, Inc. (“HCP”) during the restricted period at an average price of $36.4642. On
November 3, 2010, HCP priced a follow-on offering of its common stock at $35.25 per share.
JPMIM received an allocation that included 383,000 shares in that offering. The difference
between JPMIM’s proceeds received from the restricted period short sales of HCP shares and the
price paid for 34,800 shares received in the offering was $42,254.16. Respondent also improperly
received a benefit of $179,775.66 by purchasing the remaining 348,200 shares at a discount from
HCP’s market price. Thus, JPMIM’s participation in the 2010 HCP offering resulted in total
profits of $222,029.82.
11. On April 12, 2010 and April 14, 2010, JPMIM sold short a total of 20,700 shares of
The Macerich Company (“MAC”) during the restricted period at an average price of $42.3662 per
share. On April 15, 2010, MAC priced a follow-on offering of its common stock at $41 per share.
JPMIM received an allocation that included 28,330 shares in that offering. The difference between
JPMIM’s proceeds received from the restricted period short sales of MAC shares and the price
paid for 20,700 shares received in the offering was $28,280.34. Thus, JPMIM’s participation in
the 2010 MAC offering resulted in total profits of $28,280.34.
12. On September 14, 2012 and September 17, 2012, JPMIM sold short a total of 680
shares of Health Care REIT Inc. (“HCN”) during the restricted period at an average price of
$58.7106 per share. On September 18, 2012, HCN priced a follow-on offering of its common
stock at $56 per share. JPMIM received an allocation that included 82,900 shares in that offering.
The difference between JPMIM’s proceeds received from the restricted period short sales of HCN
shares and the price paid for 680 shares received in the offering was $1,843.21. Respondent also
improperly received a benefit of $84,826.37 by purchasing the remaining 82,220 shares at a
discount from HCN’s market price. Thus, JPMIM’s participation in the 2012 HCN offering
resulted in total profits of $86,669.58.
13. On July 31, 2012, JPMIM sold short 650 shares of Taubman Centers, Inc. (“TCO”)
during the restricted period at a price of $77.1823 per share. On August 1, 2012, TCO priced a
follow-on offering of its common stock at $76 per share. JPMIM received an allocation that
included 2,700 shares in that offering. The difference between JPMIM’s proceeds received from
the restricted period short sales of TCO shares and the price paid for 650 shares received in the
offering was $768.49. Respondent also improperly received a benefit of $3,878.81 by purchasing
the remaining 2,050 shares at a discount from TCO’s market price. Thus, JPMIM’s participation
in the 2012 TCO offering resulted in total profits of $4,647.30.
14. On October 14, 2011, JPMIM sold short 1,300 shares of Equity Lifestyle
Properties, Inc. (“ELS”) during the restricted period at a price of $64.22 per share. On October 20,
2011, ELS priced a follow-on offering of its common stock at $60.70 per share. JPMIM received
an allocation that included 111,140 shares in that offering. The difference between JPMIM’s
proceeds received from the restricted period short sales of ELS shares and the price paid for 1,300
shares received in the offering was $4,576. Thus, JPMIM’s participation in the 2011 ELS offering
resulted in total profits of $4,576.
5
15. On October 12, 2009, JPMIM sold short 20,900 shares of CBS Corporation
(“CBS”) during the restricted period at an average price of $12.0885. On October 14, 2009, CBS
priced a follow-on offering of its common stock at $12 per share. JPMIM received an allocation
that included 21,100 shares in that offering. The difference between JPMIM’s proceeds received
from the restricted period short sales of CBS shares and the price paid for 20,900 shares received in
the offering was $1,849.65. Respondent also improperly received a benefit of $155.26 by
purchasing the remaining 200 shares at a discount from CBS’ market price. Thus, JPMIM’s
participation in the 2009 CBS offering resulted in total profits of $2,004.91.
16. In total, JPMIM’s violations of Rule 105 resulted in profits of $662,763.
Violations
17. As a result of the conduct described above, JPMIM violated Rule 105 of Regulation
M under the Exchange Act.
JPMIM’s Remedial Efforts & Cooperation
18. In determining to accept the Offer, the Commission considered remedial acts
promptly undertaken by Respondent and cooperation afforded to Commission staff.
IV.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent JPMIM’s Offer.
Accordingly, it is hereby ORDERED that:
A. Pursuant to Section 21C of the Exchange Act, Respondent JPMIM cease and desist
from committing or causing any violations and any future violations of Rule 105 of Regulation M of
the Exchange Act;
B. JPMIM shall within fourteen (14) days of the entry of this Order, pay disgorgement
of $662,763, prejudgment interest of $56,758.40, and a civil money penalty in the amount of
$364,689 (for a total of $1,084,210.40) to the Securities and Exchange Commission for transfer to
the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If
timely payment is not made on the disgorgement amount, additional interest shall accrue pursuant
to SEC Rule of Practice 600. If timely payment is not made on the civil money penalty, additional
interest shall accrue pursuant to 31 U.S.C. § 3717.
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Payments must be made in one of the following ways:
(1) Respondent may transmit payment electronically to the Commission, which will
provide detailed ACH transfer/Fedwire instructions upon request;2
(2) Respondent may make direct payment from a bank account via Pay.gov through the
SEC website at http://www.sec.gov/about/offices/ofm.htm; or
(3) Respondent may pay by certified check, bank cashier’s check, or United States postal
money order, made payable to the Securities and Exchange Commission and hand-
delivered or mailed to:
Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
Payments by check or money order must be accompanied by a cover letter identifying
JPMIM as a Respondent in these proceedings, and the file number of these proceedings; a copy of
the cover letter and check or money order must be sent to Gerald W. Hodgkins, Associate Director,
Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington,
DC 20549.
2 The minimum threshold for transmission of payment electronically is $1,000,000. For amounts below the
threshold, respondents must make payments pursuant to options (2) or (3) above.
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C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be
treated as penalties paid to the government for all purposes, including all tax purposes. To
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Action, it
shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of
compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in
this action ("Penalty Offset"). If the court in any Related Action grants such a Penalty Offset,
Respondent agrees that it shall, within 30 days after entry of a final order granting the Penalty
Offset, notify the Commission's counsel in this action and pay the amount of the Penalty Offset to
the Securities and Exchange Commission. Such a payment shall not be deemed an additional civil
penalty and shall not be deemed to change the amount of the civil penalty imposed in this
proceeding. For purposes of this paragraph, a “Related Action” means a private damages action
brought against Respondent based on substantially the same facts as alleged in the Order instituted
by the Commission in this proceeding.
By the Commission.
Brent J. Fields
Secretary