China probe is latest legal headache for JPMorgan

Mon Aug 19, 2013 6:54pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By David Henry

NEW YORK (Reuters) - A federal bribery investigation into whether JPMorgan Chase & Co. JPM.N hired the children of key Chinese officials to help it win business is just the latest in a series of legal and regulatory headaches for Chief Executive Jamie Dimon.

Dimon piloted the bank through the financial crisis, but it is now facing at least a dozen investigations from federal agencies and state and foreign governments, including over the "London Whale" trading scandal that cost it more than $6.2 billion.

In the latest probe, the Securities and Exchange Commission (SEC) is looking at whether the bank's Hong Kong office hired the children of powerful heads of state-owned companies in China with the express purpose of winning underwriting business and other contracts, a person familiar with the matter said.

The SEC is questioning JPMorgan's relationships with at least two families in China that may have legitimate explanations, the source said.

U.S. law does not stop companies from hiring politically well-connected executives. But hiring people in order to win business from relatives can be bribery, and the SEC is investigating JPMorgan's actions under the U.S. Foreign Corrupt Practices Act.

SEC spokeswoman Florence Harmon declined to comment on the investigation. A Hong Kong-based spokeswoman for the bank declined to comment beyond what was in the bank's regulatory filings and said the bank was cooperating with probes.

REGULATORY HEADACHES

Whatever the outcome of the latest investigation, Dimon's time is increasingly being consumed by legal and regulatory matters.   Continued...

 
The JP Morgan sign is pictured at its Beijing office, in this picture taken December 13, 2010. REUTERS/Jason Lee