U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 18385 / October 1, 2003
Civil Action No. 1 03 CV 02028 (ESH) (D.D.C.)

SEC SUES J.P. MORGAN SECURITIES INC. FOR UNLAWFUL IPO ALLOCATION PRACTICES;
J.P. MORGAN AGREES TO SETTLEMENT CALLING FOR INJUNCTION AND PAYMENT OF $25
MILLION PENALTY

   The Securities and Exchange Commission ("Commission") announced the
   filing of a settled civil injunctive action in federal court against
   J.P. Morgan Securities Inc. ("J.P. Morgan"), a subsidiary of J.P.
   Morgan Chase & Co., relating to the firm's allocation of stock to
   institutional customers in initial public offerings ("IPOs") it
   underwrote during 1999 and 2000. In settlement of this matter, J.P.
   Morgan has consented, without admitting or denying the allegations of
   the complaint, to a final judgment that would permanently enjoin J.P.
   Morgan from violating Rule 101 of the Commission's Regulation M and
   NASD Conduct Rule 2110, and order it to pay a $25 million civil
   penalty. The settlement terms are subject to approval by the court.

   In its complaint, the Commission alleges that J.P. Morgan violated
   Rule 101 of Regulation M under the Securities Exchange Act of 1934 by
   attempting to induce certain customers who received allocations of
   IPOs to place purchase orders for additional shares in the
   aftermarket. The complaint further alleges that J.P. Morgan did in
   fact induce certain customers to place such orders and such customers
   often purchased stock during the new issues' first few trading days.

   The Commission's complaint also alleges that, in another instance,
   J.P. Morgan violated NASD Conduct Rule 2110, which requires member
   firms to observe just and equitable principles of trade, by persuading
   one or more customers in July 1999, to accept an allocation of a
   "cold" IPO (, one where there is little interest in IPO shares) by
   promising the reward of an allocation of an upcoming oversubscribed
   IPO.

   The Commission's complaint, filed in the United States District Court
   for the District of Columbia, includes the following allegations

   Rule 101 of Regulation M, among other things, prohibits underwriters,
   during a restricted period prior to the completion of their
   participation in the distribution of IPO shares, from directly or
   indirectly bidding for, purchasing, or attempting to induce any person
   to bid for or purchase any offered security in the aftermarket. As a
   prophylactic rule, Regulation M is designed to prohibit activities
   that could artificially influence the market for the offered security,
   including for example, supporting the IPO price by creating the