SEC's JPMorgan probe threatens cozy tradition of "client hires"

Wed Aug 21, 2013 5:11pm EDT
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By Lawrence White

HONG KONG (Reuters) - The U.S. government's bribery investigation into JPMorgan's employment of at least two Chinese bankers has prompted banks and other corporations across the globe to take a close look at their hiring practices.

One strategy that is certain to come under scrutiny is the "client hire".

Enlisting the relative of a top customer for a summer internship or an entry-level job is common to businesses worldwide, but it's especially rife in banking.

The industry has held strong to a well-worn mechanism where clients will "pass on" CVs or resumes of their relatives or friends to coverage bankers, whose role is to visit top executives of companies in a particular industry or sector and sell them the bank's services.

The bankers, in turn, make sure those CVs reach the staff in charge of that year's intern list.

"It happens all the time where a coverage guy will toss over some client kid's CV," said a Hong Kong based investment banker. "Finance is about doing favors for people. It's what makes the world go round."

Client hires don't necessarily by-pass the usual battery of rigorous tests and interviews that other applicants must take.

But, according to headhunters and bankers interviewed by Reuters, when it comes down to two otherwise similarly qualified candidates, the one with influential connections will win out.   Continued...

The entrance to JPMorgan Chase's international headquarters on Park Avenue is seen in New York October 2, 2012. REUTERS/Shannon Stapleton