A longtime pension fund client of J.P. Morgan Asset Management, New York, said its satisfaction with the firm was "shaken," after a report surfaced in December about alleged racism at J.P. Morgan Chase branches in the Phoenix area, according to a letter obtained by Pensions & Investments.
Pension fund executives at the Kansas City (Mo.) Public School Retirement System sent a letter to J.P. Morgan CEO Jamie Dimon saying its "entire board and staff will continue to watch J.P. Morgan's efforts to restore our confidence and trust."
J.P. Morgan Asset Management has managed assets for KCPSRS in a special situations fund since 2007, the Feb. 4 letter noted.
As of Dec. 31, JPMAM managed $13.9 million in assets for the pension fund, Executive Director Christine Gierer said Tuesday in an email. The total fund had $660.6 million in assets at that time, she added.
Following a published report in December detailing allegations of racism in Phoenix-area branches, Mr. Dimon wrote in a memo to staff that he instructed management to look into the bank's policies, practices and culture.
"I am disgusted by racism and hate in any form," Mr. Dimon wrote in the memo. "Any such behavior — explicit or veiled, deliberate or unconscious — is unacceptable and does not reflect who we are as a company and how we serve our clients and communities every day."
While the discriminatory practices reportedly took place in another J.P. Morgan unit, Kansas City pension fund executives determined that "the senior leaders who set the policies and practices for the banking group, also set the policies and practices of the asset management group," said the letter, signed by Ms. Gierer and Horace Coleman, board chairman.
"After reading the referenced article, and J.P. Morgan's response ... we've been questioned and had to question ourselves whether we've met the goal of being socially responsible investors with the monies we've entrusted to J.P. Morgan Asset Management," the letter said.
In response to the pension fund's concerns, George Gatch, the CEO of J.P. Morgan's asset management unit, said in a Feb. 10 letter to Ms. Gierer and Mr. Coleman, which KCPSRS provided to Pensions & Investments, that the firm was "addressing this matter with the utmost seriousness."
"In our asset management business, we serve as fiduciaries to a broad range of clients, including many retirement plans like KCPSRS, dedicated to helping individuals from all backgrounds and walks of life to retire with security and dignity. Maintaining the highest ethical standards and establishing an inclusive environment are cornerstones of how we do business," Mr. Gatch wrote.
"While we act to drive these principles throughout the company, there are instances in which we fall short of our ambitions," Mr. Gatch added.
The firm has been reviewing how it can strengthen its existing programs and policies, and its "most senior leaders" have led efforts to take "a deep look at the processes we have in place to ensure that we have a culture built on dignity, respect, diversity and inclusion for our customers and employees," Mr. Gatch said in the letter.
In response to the client's concerns, J.P. Morgan Asset Management also sent the Kansas City pension fund details about its firmwide diversity and inclusion efforts.
On Wednesday, a spokeswoman for J.P. Morgan Asset Management said in an email that: "We take this issue very seriously and we are committed to communicating directly with our clients on any areas of concern, as we have in this case."
Ms. Gierer said Tuesday in an email that the KCPSRS board has reviewed the responses from J.P. Morgan and no further action was taken.
Bloomberg contributed to this article.
