The information in this preliminary pricing supplement is not
complete and may be changed. This preliminary pricing supplement is
not an offer to sell nor does it seek an offer to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
Subject to completion dated March 24, 2023
March , 2023 |
Registration Statement Nos. 333-236659 and 333-236659-01;
Rule424(b)(2)
|

JPMorgan Chase Financial Company LLC
Structured
Investments
Callable Contingent Interest Notes Linked to the Common Stock of
Bank of America Corporation due April 2, 2025
Fully and
Unconditionally Guaranteed by JPMorgan
Chase & Co.
|
● |
The notes are designed for investors who seek a Contingent
Interest Payment with respect to each Review Date for which the
closing price of one share of the Reference Stock is greater than
or equal to 60.00% of the Initial Value, which we refer to as the
Interest Barrier. |
|
● |
The notes may be redeemed early, in whole but not in part, at
our option on any of the Interest Payment Dates (other than the
first and final Interest Payment Dates). |
|
● |
The earliest date on which the notes may be redeemed early is
October 3, 2023. |
|
● |
Investors should be willing to accept the risk of losing some
or all of their principal and the risk that no Contingent Interest
Payment may be made with respect to some or all Review Dates. |
|
● |
Investors should also be willing to forgo fixed interest and
dividend payments, in exchange for the opportunity to receive
Contingent Interest Payments. |
|
● |
The notes are unsecured and unsubordinated obligations of
JPMorgan Chase Financial Company LLC, which we refer to as JPMorgan
Financial, the payment on which is fully and unconditionally
guaranteed by JPMorgan Chase & Co. Any payment on
the notes is subject to the credit risk of JPMorgan Financial, as
issuer of the notes, and the credit risk of JPMorgan
Chase & Co., as guarantor of the notes. |
|
● |
Minimum denominations of $1,000 and integral multiples
thereof |
|
● |
The notes are expected to price on or about March 28, 2023 and
are expected to settle on or about March 31, 2023. |
Investing in the notes involves a number of risks. See “Risk
Factors” beginning on page S-2 of the accompanying prospectus
supplement, “Risk Factors” beginning on page PS-12 of the
accompanying product supplement and “Selected Risk Considerations”
beginning on page PS-4 of this pricing supplement.
Neither the Securities and Exchange Commission (the “SEC”) nor any
state securities commission has approved or disapproved of the
notes or passed upon the accuracy or the adequacy of this pricing
supplement or the accompanying product supplement, prospectus
supplement and prospectus. Any representation to the contrary is a
criminal offense.
|
Price to Public (1) |
Fees and Commissions (2) |
Proceeds to Issuer |
Per note |
$1,000 |
$ |
$ |
Total |
$ |
$ |
$ |
(1) See “Supplemental Use of Proceeds” in this pricing supplement
for information about the components of the price to public of the
notes.
(2) J.P. Morgan Securities LLC, which we refer to as JPMS, acting
as agent for JPMorgan Financial, will pay all of the selling
commissions it receives from us to other affiliated or unaffiliated
dealers. In no event will these selling commissions exceed $17.50
per $1,000 principal amount note. See “Plan of Distribution
(Conflicts of Interest)” in the accompanying product
supplement.
|
If the notes priced today, the estimated value of the notes
would be approximately $967.00 per $1,000 principal amount note.
The estimated value of the notes, when the terms of the notes are
set, will be provided in the pricing supplement and will not be
less than $930.00 per $1,000 principal amount note. See “The
Estimated Value of the Notes” in this pricing supplement for
additional information.
The notes are not bank deposits, are not insured by the Federal
Deposit Insurance Corporation or any other governmental agency and
are not obligations of, or guaranteed by, a bank.
Pricing supplement to product supplement no. 4-II dated November 4,
2020 and the prospectus and prospectus supplement, each dated April
8, 2020
Key Terms
Issuer:
JPMorgan Chase Financial Company LLC, an indirect, wholly owned
finance subsidiary of JPMorgan Chase & Co.
Guarantor:
JPMorgan Chase & Co.
Reference Stock:
The common stock of Bank of America Corporation, par value $0.01
per share (Bloomberg ticker: BAC). We refer to Bank of America
Corporation as “Bank of America”.
Contingent Interest Payments:
If the notes have not been previously redeemed early and the
closing price of one share of the Reference Stock on any Review
Date is greater than or equal to the Interest Barrier, you will
receive on the applicable Interest Payment Date for each $1,000
principal amount note a Contingent Interest Payment equal to at
least $37.00 (equivalent to a Contingent Interest Rate of at least
14.80% per annum, payable at a rate of at least 3.70% per quarter)
(to be provided in the pricing supplement).
If the closing price of one
share of the Reference Stock on any Review Date is less than the
Interest Barrier, no Contingent Interest Payment will be made with
respect to that Review Date.
Contingent Interest Rate:
At least 14.80% per annum, payable at a rate of at least 3.70% per
quarter (to be provided in the pricing supplement)
Interest Barrier / Trigger Value:
60.00% of the Initial Value
Pricing Date:
On or about March 28, 2023
Original Issue Date (Settlement Date):
On or about March 31, 2023
Review Dates*:
June 28, 2023, September 28, 2023, December 28, 2023, March 28,
2024, June 28, 2024, September 30, 2024, December 30, 2024 and
March 28, 2025 (the “final Review Date”)
Interest Payment Dates*:
July 3, 2023, October 3, 2023, January 3, 2024, April 3, 2024, July
3, 2024, October 3, 2024, January 3, 2025 and the Maturity
Date
Maturity Date*:
April 2, 2025
* Subject to postponement in the event of a market disruption event
and as described under “General Terms of Notes — Postponement of a
Determination Date — Notes Linked to a Single Underlying — Notes
Linked to a Single Underlying (Other Than a Commodity Index)” and
“General Terms of Notes — Postponement of a Payment Date” in the
accompanying product supplement
|
|
Early Redemption:
We, at our election, may redeem
the notes early, in whole but not in part, on any of the Interest
Payment Dates (other than the first and final Interest Payment
Dates) at a price, for each $1,000 principal amount note, equal to
$1,000 plus the Contingent Interest Payment, if any,
applicable to the immediately preceding Review Date. If we intend
to redeem your notes early, we will deliver notice to The
Depository Trust Company, or DTC, at least three business days
before the applicable Interest Payment Date on which the notes are
redeemed early.
Payment at Maturity:
If the notes have not been
redeemed early and the Final Value is greater than or equal to the
Trigger Value, you will receive a cash payment at maturity, for
each $1,000 principal amount note, equal to (a) $1,000 plus
(b) the Contingent Interest Payment applicable to the final Review
Date.
If the notes
have not been redeemed early and the Final Value is less than the
Trigger Value, your payment at maturity per $1,000 principal amount
note will be calculated as follows:
$1,000 +
($1,000 × Stock Return)
If the notes have not been
redeemed early and the Final Value is less than the Trigger Value,
you will lose more than 40.00% of your principal amount at maturity
and could lose all of your principal amount at
maturity.
Stock Return:
(Final
Value – Initial Value)
Initial Value
Initial Value:
The closing price of one share of the Reference Stock on the
Pricing Date
Final Value:
The closing price of one share of the Reference Stock on the final
Review Date
Stock Adjustment Factor:
The Stock Adjustment Factor is referenced in determining the
closing price of one share of the Reference Stock and is set equal
to 1.0 on the Pricing Date. The Stock Adjustment Factor is subject
to adjustment upon the occurrence of certain corporate events
affecting the Reference Stock. See “The Underlyings — Reference
Stocks — Anti-Dilution Adjustments” and “The Underlyings —
Reference Stocks — Reorganization Events” in the accompanying
product supplement for further information.
|
PS-1
| Structured Investments
Callable Contingent Interest Notes Linked to the Common Stock of
Bank of America Corporation
|
 |
How the Notes Work
Payments in Connection with the First Review Date

Payments in Connection with Review Dates (Other than the First
and Final Review Dates)

Payment at Maturity If the Notes Have Not Been Redeemed
Early

PS-2
| Structured Investments
Callable Contingent Interest Notes Linked to the Common Stock of
Bank of America Corporation
|
 |
Total Contingent Interest Payments
The table below illustrates the hypothetical total Contingent
Interest Payments per $1,000 principal amount note over the term of
the notes based on a hypothetical Contingent Interest Rate of
14.80% per annum, depending on how many Contingent Interest
Payments are made prior to early redemption or maturity. The actual
Contingent Interest Rate will be provided in the pricing supplement
and will be at least 14.80% per annum.
Number of Contingent
Interest Payments |
Total Contingent Interest
Payments |
8 |
$296.00 |
7 |
$259.00 |
6 |
$222.00 |
5 |
$185.00 |
4 |
$148.00 |
3 |
$111.00 |
2 |
$74.00 |
1 |
$37.00 |
0 |
$0.00 |
Hypothetical Payout Examples
The following examples illustrate payments on the notes linked to a
hypothetical Reference
Stock, assuming a range of performances for the hypothetical
Reference
Stock on the Review Dates.
The hypothetical payments set forth below assume the following:
|
● |
the notes have not been redeemed early; |
|
● |
an Initial Value of $100.00; |
|
● |
an Interest Barrier and a Trigger Value of $60.00
(equal to 60.00% of the hypothetical Initial Value); and |
|
● |
a Contingent Interest Rate of 14.80% per annum (payable at a
rate of 3.70% per quarter). |
The hypothetical Initial Value of $100.00 has been chosen for
illustrative purposes only and may not represent a likely actual
Initial Value.
The actual Initial Value will be the closing price of one share of
the Reference Stock on the Pricing Date and will be provided in the
pricing supplement. For historical data regarding the actual
closing prices of one share of the Reference Stock, please see the
historical information set forth under “The Reference Stock” in
this pricing supplement.
Each hypothetical payment set forth below is for illustrative
purposes only and may not be the actual payment applicable to a
purchaser of the notes. The numbers appearing in the following
examples have been rounded for ease of analysis.
Example 1 — Notes have NOT been redeemed early and the Final
Value is greater than or equal to the Trigger Value.
Date |
Closing
Price |
Payment
(per $1,000 principal amount note) |
First Review Date |
$95.00 |
$37.00 |
Second Review Date |
$85.00 |
$37.00 |
Third through Seventh Review Dates |
Less than Interest Barrier |
$0 |
Final Review Date |
$90.00 |
$1,037.00 |
|
Total Payment |
$1,111.00 (11.10% return) |
Because the notes have not been redeemed early and the Final Value
is greater than or equal to the Trigger Value, the payment at
maturity, for each $1,000 principal amount note, will be $1,037.00
(or $1,000 plus the Contingent Interest Payment applicable
to the final Review Date). When added to the Contingent Interest
Payments received with respect to the prior Review Dates, the total
amount paid, for each $1,000 principal amount note, is
$1,111.00.
Example 2 — Notes have NOT been redeemed early and the Final
Value is less than the Trigger Value.
Date |
Closing
Price |
Payment
(per $1,000 principal amount note) |
PS-3
| Structured Investments
Callable Contingent Interest Notes Linked to the Common Stock of
Bank of America Corporation
|
 |
First Review Date |
$45.00 |
$0 |
Second Review Date |
$55.00 |
$0 |
Third through Seventh Review Dates |
Less than Interest Barrier |
$0 |
Final Review Date |
$40.00 |
$400.00 |
|
Total Payment |
$400.00 (-60.00% return) |
Because the notes have not been redeemed early, the Final Value is
less than the Trigger Value and the Stock Return
is -60.00%, the payment at maturity will be $400.00 per
$1,000 principal amount note, calculated as follows:
$1,000 + [$1,000 × (-60.00%)] = $400.00
The hypothetical returns and hypothetical payments on the notes
shown above apply only if you hold the notes for their entire
term. These hypotheticals do not reflect the fees or expenses
that would be associated with any sale in the secondary market. If
these fees and expenses were included, the hypothetical returns and
hypothetical payments shown above would likely be lower.
Selected Risk Considerations
An investment in the notes involves significant risks. These risks
are explained in more detail in the “Risk Factors” sections of the
accompanying prospectus supplement and product supplement.
Risks Relating to the Notes Generally
|
● |
YOUR INVESTMENT IN THE NOTES MAY RESULT IN A LOSS —
The notes do not guarantee any return of principal. If the notes
have not been redeemed early and the Final Value is less than the
Trigger Value, you will lose 1% of the principal amount of your
notes for every 1% that the Final Value is less than the Initial
Value. Accordingly, under these circumstances, you will lose more
than 40.00% of your principal amount at maturity and could lose all
of your principal amount at maturity. |
|
● |
THE NOTES DO NOT GUARANTEE THE PAYMENT OF INTEREST AND MAY
NOT PAY ANY INTEREST AT ALL —
If the notes have not been redeemed early, we will make a
Contingent Interest Payment with respect to a Review Date only if
the closing price of one share of the Reference Stock on that
Review Date is greater than or equal to the Interest Barrier. If
the closing price of one share of the Reference Stock on that
Review Date is less than the Interest Barrier, no Contingent
Interest Payment will be made with respect to that Review Date.
Accordingly, if the closing price of one share of the Reference
Stock on each Review Date is less than the Interest Barrier, you
will not receive any interest payments over the term of the
notes. |
|
● |
CREDIT RISKS OF JPMORGAN FINANCIAL AND JPMORGAN
CHASE & CO. —
Investors are dependent on our and JPMorgan
Chase & Co.’s ability to pay all amounts due on the
notes. Any actual or potential change in our or JPMorgan
Chase & Co.’s creditworthiness or credit spreads, as
determined by the market for taking that credit risk, is likely to
adversely affect the value of the notes. If we and JPMorgan
Chase & Co. were to default on our payment
obligations, you may not receive any amounts owed to you under the
notes and you could lose your entire investment. |
|
● |
AS A FINANCE SUBSIDIARY, JPMORGAN FINANCIAL HAS NO
INDEPENDENT OPERATIONS AND HAS LIMITED ASSETS —
As a finance subsidiary of JPMorgan Chase & Co., we
have no independent operations beyond the issuance and
administration of our securities. Aside from the initial capital
contribution from JPMorgan Chase & Co., substantially
all of our assets relate to obligations of our affiliates to make
payments under loans made by us or other intercompany agreements.
As a result, we are dependent upon payments from our affiliates to
meet our obligations under the notes. If these affiliates do not
make payments to us and we fail to make payments on the notes, you
may have to seek payment under the related guarantee by JPMorgan
Chase & Co., and that guarantee will rank pari
passu with all other unsecured and unsubordinated obligations
of JPMorgan Chase & Co. |
|
● |
THE APPRECIATION POTENTIAL OF THE NOTES IS LIMITED TO THE
SUM OF ANY CONTINGENT INTEREST PAYMENTS THAT MAY BE PAID OVER THE
TERM OF THE NOTES,
regardless of any appreciation of the Reference Stock, which may be
significant. You will not participate in any appreciation of the
Reference Stock. |
|
● |
THE BENEFIT PROVIDED BY THE TRIGGER VALUE MAY TERMINATE ON
THE FINAL REVIEW DATE —
If the Final Value is less than the Trigger Value and the notes
have not been redeemed early, the benefit provided by the Trigger
Value will terminate and you will be fully exposed to any
depreciation of the Reference Stock. |
|
● |
THE OPTIONAL EARLY REDEMPTION FEATURE MAY FORCE A POTENTIAL
EARLY EXIT —
If we elect to redeem your notes early, the term of the notes may
be reduced to as short as approximately six months and you will not
receive any Contingent Interest Payments after the applicable
Interest Payment Date. There is no guarantee that you would be able
to reinvest the proceeds from an investment in the notes at a
comparable return and/or with a comparable interest rate for a
similar level of risk. Even in cases where we elect to redeem your
notes before maturity, you are not entitled to any fees and
commissions described on the front cover of this pricing
supplement. |
|
● |
YOU WILL NOT RECEIVE DIVIDENDS ON THE REFERENCE STOCK OR
HAVE ANY RIGHTS WITH RESPECT TO THE REFERENCE STOCK. |
PS-4
| Structured Investments
Callable Contingent Interest Notes Linked to the Common Stock of
Bank of America Corporation
|
 |
|
● |
THE RISK OF THE CLOSING PRICE OF ONE SHARE OF THE REFERENCE
STOCK FALLING BELOW THE INTEREST BARRIER OR THE TRIGGER VALUE IS
GREATER IF THE PRICE OF ONE SHARE OF THE REFERENCE STOCK IS
VOLATILE. |
|
● |
LACK OF LIQUIDITY —
The notes will not be listed on any securities exchange.
Accordingly, the price at which you may be able to trade your notes
is likely to depend on the price, if any, at which JPMS is willing
to buy the notes. You may not be able to sell your notes. The notes
are not designed to be short-term trading instruments. Accordingly,
you should be able and willing to hold your notes to maturity. |
|
● |
THE FINAL TERMS AND VALUATION OF THE NOTES WILL BE PROVIDED
IN THE PRICING SUPPLEMENT —
You should consider your potential investment in the notes based on
the minimums for the estimated value of the notes and the
Contingent Interest Rate. |
Risks Relating to Conflicts of Interest
|
● |
POTENTIAL CONFLICTS —
We and our affiliates play a variety of roles in connection with
the notes. In performing these duties, our and JPMorgan
Chase & Co.’s economic interests are potentially
adverse to your interests as an investor in the notes. It is
possible that hedging or trading activities of ours or our
affiliates in connection with the notes could result in substantial
returns for us or our affiliates while the value of the notes
declines. Please refer to “Risk Factors — Risks Relating to
Conflicts of Interest” in the accompanying product supplement. |
Risks Relating to the Estimated Value and Secondary Market
Prices of the Notes
|
● |
THE ESTIMATED VALUE OF THE NOTES WILL BE LOWER THAN THE
ORIGINAL ISSUE PRICE (PRICE TO PUBLIC) OF THE NOTES —
The estimated value of the notes is only an estimate determined by
reference to several factors. The original issue price of the notes
will exceed the estimated value of the notes because costs
associated with selling, structuring and hedging the notes are
included in the original issue price of the notes. These costs
include the selling commissions, the projected profits, if any,
that our affiliates expect to realize for assuming risks inherent
in hedging our obligations under the notes and the estimated cost
of hedging our obligations under the notes. See “The Estimated
Value of the Notes” in this pricing supplement. |
|
● |
THE ESTIMATED VALUE OF THE NOTES DOES NOT REPRESENT FUTURE
VALUES OF THE NOTES AND MAY DIFFER FROM OTHERS’ ESTIMATES —
See “The Estimated Value of the Notes” in this pricing
supplement. |
|
● |
THE ESTIMATED VALUE OF THE NOTES IS DERIVED BY REFERENCE TO
AN INTERNAL FUNDING RATE —
The internal funding rate used in the determination of the
estimated value of the notes may differ from the market-implied
funding rate for vanilla fixed income instruments of a similar
maturity issued by JPMorgan Chase & Co. or its
affiliates. Any difference may be based on, among other things, our
and our affiliates’ view of the funding value of the notes as well
as the higher issuance, operational and ongoing liability
management costs of the notes in comparison to those costs for the
conventional fixed income instruments of JPMorgan
Chase & Co. This internal funding rate is based on
certain market inputs and assumptions, which may prove to be
incorrect, and is intended to approximate the prevailing market
replacement funding rate for the notes. The use of an internal
funding rate and any potential changes to that rate may have an
adverse effect on the terms of the notes and any secondary market
prices of the notes. See “The Estimated Value of the Notes” in this
pricing supplement. |
|
● |
THE VALUE OF THE NOTES AS PUBLISHED BY JPMS (AND WHICH MAY
BE REFLECTED ON CUSTOMER ACCOUNT STATEMENTS) MAY BE HIGHER THAN THE
THEN-CURRENT ESTIMATED VALUE OF THE NOTES FOR A LIMITED TIME PERIOD
—
We generally expect that some of the costs included in the original
issue price of the notes will be partially paid back to you in
connection with any repurchases of your notes by JPMS in an amount
that will decline to zero over an initial predetermined period. See
“Secondary Market Prices of the Notes” in this pricing supplement
for additional information relating to this initial period.
Accordingly, the estimated value of your notes during this initial
period may be lower than the value of the notes as published by
JPMS (and which may be shown on your customer account
statements). |
|
● |
SECONDARY MARKET PRICES OF THE NOTES WILL LIKELY BE LOWER
THAN THE ORIGINAL ISSUE PRICE OF THE NOTES —
Any secondary market prices of the notes will likely be lower than
the original issue price of the notes because, among other things,
secondary market prices take into account our internal secondary
market funding rates for structured debt issuances and, also,
because secondary market prices may exclude selling commissions,
projected hedging profits, if any, and estimated hedging costs that
are included in the original issue price of the notes. As a result,
the price, if any, at which JPMS will be willing to buy the notes
from you in secondary market transactions, if at all, is likely to
be lower than the original issue price. Any sale by you prior to
the Maturity Date could result in a substantial loss to you. |
|
● |
SECONDARY MARKET PRICES OF THE NOTES WILL BE IMPACTED BY
MANY ECONOMIC AND MARKET FACTORS —
The secondary market price of the notes during their term will be
impacted by a number of economic and market factors, which may
either offset or magnify each other, aside from the selling
commissions, projected hedging profits, if any, estimated hedging
costs and the price of one share of the Reference Stock.
Additionally, independent pricing vendors and/or third party
broker-dealers may publish a price for the notes, which may also be
reflected on customer account statements. This price may be
different (higher or lower) than the price of the notes, if any, at
which JPMS may be willing to purchase your notes in the secondary
market. See “Risk Factors — Risks Relating to the Estimated Value
and Secondary Market Prices of the Notes — Secondary market prices
of the notes will be impacted by many economic and market factors”
in the accompanying product supplement. |
PS-5
| Structured Investments
Callable Contingent Interest Notes Linked to the Common Stock of
Bank of America Corporation
|
 |
Risks Relating to the Reference Stock
|
● |
NO AFFILIATION WITH THE REFERENCE STOCK ISSUER —
We have not independently verified any of the information about the
Reference Stock issuer contained in this pricing supplement. You
should undertake your own investigation into the Reference Stock
and its issuer. We are not responsible for the Reference Stock
issuer’s public disclosure of information, whether contained in SEC
filings or otherwise. |
|
● |
THE ANTI-DILUTION PROTECTION FOR THE REFERENCE STOCK IS
LIMITED AND MAY BE DISCRETIONARY —
The calculation agent will not make an adjustment in response to
all events that could affect the Reference Stock. The calculation
agent may make adjustments in response to events that are not
described in the accompanying product supplement to account for any
diluting or concentrative effect, but the calculation agent is
under no obligation to do so or to consider your interests as a
holder of the notes in making these determinations. |
PS-6
| Structured Investments
Callable Contingent Interest Notes Linked to the Common Stock of
Bank of America Corporation
|
 |
The Reference Stock
All information contained herein on the Reference Stock and on Bank
of America is derived from publicly available sources, without
independent verification. According to its publicly available
filings with the SEC, Bank of America Corporation provides a range
of banking and non-banking financial services and products
domestically and internationally. The common stock of Bank of
America, par value $0.01 per share (Bloomberg ticker: BAC), is
registered under the Securities Exchange Act of 1934, as amended,
which we refer to as the Exchange Act, and is listed on the New
York Stock Exchange, which we refer to as the relevant exchange for
purposes of Bank of America in the accompanying product supplement.
Information provided to or filed with the SEC by Bank of America
pursuant to the Exchange Act can be located by reference to the SEC
file number 001-06523, and can be accessed through www.sec.gov. We
do not make any representation that these publicly available
documents are accurate or complete.
Historical Information
The following graph sets forth the historical performance of the
Reference Stock based on the weekly historical closing prices of
one share of the Reference Stock from January 5, 2018 through March
17, 2023. The closing price of one share of the Reference Stock on
March 23, 2023 was $26.97. We obtained the closing prices above and
below from the Bloomberg Professional® service
(“Bloomberg”), without independent verification. The closing prices
above and below may have been adjusted by Bloomberg for corporate
actions, such as stock splits, public offerings, mergers and
acquisitions, spin-offs, delistings and bankruptcy.
The historical closing prices of one share of the Reference Stock
should not be taken as an indication of future performance, and no
assurance can be given as to the closing price of one share of the
Reference Stock on the Pricing Date or any Review Date. There can
be no assurance that the performance of the Reference Stock will
result in the return of any of your principal amount or the payment
of any interest.
Historical Performance of Bank of America Corporation (Common
Stock)

Source: Bloomberg
|
Tax Treatment
You should review carefully the section entitled “Material U.S.
Federal Income Tax Consequences” in the accompanying product
supplement no. 4-II. In determining our reporting responsibilities
we intend to treat (i) the notes for U.S. federal income tax
purposes as prepaid forward contracts with associated contingent
coupons and (ii) any Contingent Interest Payments as ordinary
income, as described in the section entitled “Material U.S. Federal
Income Tax Consequences — Tax Consequences to U.S. Holders — Notes
Treated as Prepaid Forward Contracts with Associated Contingent
Coupons” in the accompanying product supplement. Based on the
advice of Davis Polk & Wardwell LLP, our special tax counsel,
we believe that this is a reasonable treatment, but that there are
other reasonable treatments that the IRS or a court may adopt, in
which case the timing and character of any income or loss on the
notes could be materially affected. In addition, in 2007 Treasury
and the IRS released a notice requesting comments on the U.S.
federal income tax treatment of “prepaid forward contracts” and
similar instruments. The notice focuses in particular on whether to
require investors in these instruments to accrue income over the
term of their investment. It also asks for comments on a number of
related topics, including the character of income or loss with
respect to these instruments and the relevance of factors such as
the nature of the underlying property to which the instruments are
linked. While the notice requests comments on appropriate
transition rules and effective dates, any Treasury regulations or
other guidance promulgated after consideration of these issues
could materially affect the tax consequences of an investment in
the notes, possibly with retroactive effect. The discussions above
and in the accompanying
PS-7
| Structured Investments
Callable Contingent Interest Notes Linked to the Common Stock of
Bank of America Corporation
|
 |
product supplement do not address the consequences to taxpayers
subject to special tax accounting rules under Section 451(b) of the
Code. You should consult your tax adviser regarding the U.S.
federal income tax consequences of an investment in the notes,
including possible alternative treatments and the issues presented
by the notice described above.
Non-U.S. Holders — Tax Considerations. The U.S. federal
income tax treatment of Contingent Interest Payments is uncertain,
and although we believe it is reasonable to take a position that
Contingent Interest Payments are not subject to U.S. withholding
tax (at least if an applicable Form W-8 is provided), it is
expected that withholding agents will (and we, if we are the
withholding agent, intend to) withhold on any Contingent Interest
Payment paid to a Non-U.S. Holder generally at a rate of 30% or at
a reduced rate specified by an applicable income tax treaty under
an “other income” or similar provision. We will not be required to
pay any additional amounts with respect to amounts withheld. In
order to claim an exemption from, or a reduction in, the 30%
withholding tax, a Non-U.S. Holder of the notes must comply with
certification requirements to establish that it is not a U.S.
person and is eligible for such an exemption or reduction under an
applicable tax treaty. If you are a Non-U.S. Holder, you should
consult your tax adviser regarding the tax treatment of the notes,
including the possibility of obtaining a refund of any withholding
tax and the certification requirement described above.
Section 871(m) of the Code and Treasury regulations promulgated
thereunder (“Section 871(m)”) generally impose a 30% withholding
tax (unless an income tax treaty applies) on dividend equivalents
paid or deemed paid to Non-U.S. Holders with respect to certain
financial instruments linked to U.S. equities or indices that
include U.S. equities. Section 871(m) provides certain exceptions
to this withholding regime, including for instruments linked to
certain broad-based indices that meet requirements set forth in the
applicable Treasury regulations. Additionally, a recent IRS notice
excludes from the scope of Section 871(m) instruments issued prior
to January 1, 2025 that do not have a delta of one with respect to
underlying securities that could pay U.S.-source dividends for U.S.
federal income tax purposes (each an “Underlying Security”). Based
on certain determinations made by us, we expect that Section 871(m)
will not apply to the notes with regard to Non-U.S. Holders. Our
determination is not binding on the IRS, and the IRS may disagree
with this determination. Section 871(m) is complex and its
application may depend on your particular circumstances, including
whether you enter into other transactions with respect to an
Underlying Security. If necessary, further information regarding
the potential application of Section 871(m) will be provided in the
pricing supplement for the notes. You should consult your tax
adviser regarding the potential application of Section 871(m) to
the notes.
In the event of any withholding on the notes, we will not be
required to pay any additional amounts with respect to amounts so
withheld.
The Estimated Value of the Notes
The estimated value of the notes set forth on the cover of this
pricing supplement is equal to the sum of the values of the
following hypothetical components: (1) a fixed-income debt
component with the same maturity as the notes, valued using the
internal funding rate described below, and (2) the derivative or
derivatives underlying the economic terms of the notes. The
estimated value of the notes does not represent a minimum price at
which JPMS would be willing to buy your notes in any secondary
market (if any exists) at any time. The internal funding rate used
in the determination of the estimated value of the notes may differ
from the market-implied funding rate for vanilla fixed income
instruments of a similar maturity issued by JPMorgan
Chase & Co. or its affiliates. Any difference may be
based on, among other things, our and our affiliates’ view of the
funding value of the notes as well as the higher issuance,
operational and ongoing liability management costs of the notes in
comparison to those costs for the conventional fixed income
instruments of JPMorgan Chase & Co. This internal
funding rate is based on certain market inputs and assumptions,
which may prove to be incorrect, and is intended to approximate the
prevailing market replacement funding rate for the notes. The use
of an internal funding rate and any potential changes to that rate
may have an adverse effect on the terms of the notes and any
secondary market prices of the notes. For additional information,
see “Selected Risk Considerations — Risks Relating to the Estimated
Value and Secondary Market Prices of the Notes — The Estimated
Value of the Notes Is Derived by Reference to an Internal Funding
Rate” in this pricing supplement.
The value of the derivative or derivatives underlying the economic
terms of the notes is derived from internal pricing models of our
affiliates. These models are dependent on inputs such as the traded
market prices of comparable derivative instruments and on various
other inputs, some of which are market-observable, and which can
include volatility, dividend rates, interest rates and other
factors, as well as assumptions about future market events and/or
environments. Accordingly, the estimated value of the notes is
determined when the terms of the notes are set based on market
conditions and other relevant factors and assumptions existing at
that time.
The estimated value of the notes does not represent future values
of the notes and may differ from others’ estimates. Different
pricing models and assumptions could provide valuations for the
notes that are greater than or less than the estimated value of the
notes. In addition, market conditions and other relevant factors in
the future may change, and any assumptions may prove to be
incorrect. On future dates, the value of the notes could change
significantly based on, among other things, changes in market
conditions, our or JPMorgan Chase & Co.’s
creditworthiness, interest rate movements and other relevant
factors, which may impact the price, if any, at which JPMS would be
willing to buy notes from you in secondary market transactions.
PS-8
| Structured Investments
Callable Contingent Interest Notes Linked to the Common Stock of
Bank of America Corporation
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The estimated value of the notes will be lower than the original
issue price of the notes because costs associated with selling,
structuring and hedging the notes are included in the original
issue price of the notes. These costs include the selling
commissions paid to JPMS and other affiliated or unaffiliated
dealers, the projected profits, if any, that our affiliates expect
to realize for assuming risks inherent in hedging our obligations
under the notes and the estimated cost of hedging our obligations
under the notes. Because hedging our obligations entails risk and
may be influenced by market forces beyond our control, this hedging
may result in a profit that is more or less than expected, or it
may result in a loss. A portion of the profits, if any, realized in
hedging our obligations under the notes may be allowed to other
affiliated or unaffiliated dealers, and we or one or more of our
affiliates will retain any remaining hedging profits. See “Selected
Risk Considerations — Risks Relating to the Estimated Value and
Secondary Market Prices of the Notes — The Estimated Value of the
Notes Will Be Lower Than the Original Issue Price (Price to Public)
of the Notes” in this pricing supplement.
Secondary Market Prices of the Notes
For information about factors that will impact any secondary market
prices of the notes, see “Risk Factors — Risks Relating to the
Estimated Value and Secondary Market Prices of the Notes —
Secondary market prices of the notes will be impacted by many
economic and market factors” in the accompanying product
supplement. In addition, we generally expect that some of the costs
included in the original issue price of the notes will be partially
paid back to you in connection with any repurchases of your notes
by JPMS in an amount that will decline to zero over an initial
predetermined period. These costs can include selling commissions,
projected hedging profits, if any, and, in some circumstances,
estimated hedging costs and our internal secondary market funding
rates for structured debt issuances. This initial predetermined
time period is intended to be the shorter of six months and
one-half of the stated term of the notes. The length of any such
initial period reflects the structure of the notes, whether our
affiliates expect to earn a profit in connection with our hedging
activities, the estimated costs of hedging the notes and when these
costs are incurred, as determined by our affiliates. See “Selected
Risk Considerations — Risks Relating to the Estimated Value and
Secondary Market Prices of the Notes — The Value of the Notes as
Published by JPMS (and Which May Be Reflected on Customer Account
Statements) May Be Higher Than the Then-Current Estimated Value of
the Notes for a Limited Time Period” in this pricing
supplement.
Supplemental Use of Proceeds
The notes are offered to meet investor demand for products that
reflect the risk-return profile and market exposure provided by the
notes. See “How the Notes Work” and “Hypothetical Payout Examples”
in this pricing supplement for an illustration of the risk-return
profile of the notes and “The Reference Stock” in this pricing
supplement for a description of the market exposure provided by the
notes.
The original issue price of the notes is equal to the estimated
value of the notes plus the selling commissions paid to JPMS and
other affiliated or unaffiliated dealers, plus (minus) the
projected profits (losses) that our affiliates expect to realize
for assuming risks inherent in hedging our obligations under the
notes, plus the estimated cost of hedging our obligations under the
notes.
Supplemental Plan of Distribution
We expect that delivery of the notes will be made against payment
for the notes on or about the Original Issue Date set forth on the
front cover of this pricing supplement, which will be the third
business day following the Pricing Date of the notes (this
settlement cycle being referred to as “T+3”). Under Rule 15c6-1 of
the Securities Exchange Act of 1934, as amended, trades in the
secondary market generally are required to settle in two business
days, unless the parties to that trade expressly agree otherwise.
Accordingly, purchasers who wish to trade notes on any date prior
to two business days before delivery will be required to specify an
alternate settlement cycle at the time of any such trade to prevent
a failed settlement and should consult their own advisors.
Supplemental Information About the Form of the Notes
The notes will initially be represented by a type of global
security that we refer to as a master note. A master note
represents multiple securities that may be issued at different
times and that may have different terms. The trustee and/or
paying agent will, in accordance with instructions from us, make
appropriate entries or notations in its records relating to the
master note representing the notes to indicate that the master note
evidences the notes.
Additional Terms Specific to the Notes
You may revoke your offer to purchase the notes at any time prior
to the time at which we accept such offer by notifying the
applicable agent. We reserve the right to change the terms of, or
reject any offer to purchase, the notes prior to their issuance. In
the event of any changes to the terms of the notes, we will notify
you and you will be asked to accept such changes in connection with
your purchase. You may also choose to reject such changes, in which
case we may reject your offer to purchase.
You should read this pricing supplement together with the
accompanying prospectus, as supplemented by the accompanying
prospectus supplement relating to our Series A medium-term notes of
which these notes are a part, and the more detailed information
contained in the accompanying product supplement. This pricing
supplement, together with the documents listed below, contains the
terms of the notes and supersedes all other prior or
contemporaneous oral statements as well as any other written
materials including preliminary or indicative pricing terms,
correspondence, trade ideas, structures for implementation, sample
structures, fact sheets,
PS-9
| Structured Investments
Callable Contingent Interest Notes Linked to the Common Stock of
Bank of America Corporation
|
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brochures or other educational materials of ours. You should
carefully consider, among other things, the matters set forth in
the “Risk Factors” sections of the accompanying prospectus
supplement and the accompanying product supplement, as the notes
involve risks not associated with conventional debt securities. We
urge you to consult your investment, legal, tax, accounting and
other advisers before you invest in the notes.
You may access these documents on the SEC website at www.sec.gov
as follows (or if such address has changed, by reviewing our
filings for the relevant date on the SEC website):
Our Central Index Key, or CIK, on the SEC website is 1665650, and
JPMorgan Chase & Co.’s CIK is 19617. As used in this
pricing supplement, “we,” “us” and “our” refer to JPMorgan
Financial.
PS-10
| Structured Investments
Callable Contingent Interest Notes Linked to the Common Stock of
Bank of America Corporation
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