Exclusive: U.S. expands China hiring probe to Morgan Stanley
By Aruna Viswanatha and Emily Flitter
(Reuters) - The U.S. Justice Department is probing Morgan Stanley for its hiring practices in China as part of an industry-wide investigation by the government into whether banks' employment of politically connected Chinese breached U.S. bribery laws, according to people familiar with the matter.
As part of the industry sweep, the U.S. Securities and Exchange Commission sent letters to Morgan Stanley and other banks, including Goldman Sachs and Citigroup, seeking information about their hiring practices, according to several people familiar with the matter.
The SEC has asked the financial services firms to provide information about their hiring of the relatives of government officials in China, said two people, who were not authorized to speak publicly.
The SEC passed information relating to specific hires and investment banking deals at Morgan Stanley, which has a long history in China, to the Justice Department, one of the people said.
Wesley McDade, a spokesman for Morgan Stanley; Mark Costiglio, a spokesman for Citigroup; and Andrew Williams, a spokesman for Goldman Sachs all declined to comment.
U.S. authorities' interest in the hiring practices of banks operating in China first came to light in August when media reports disclosed that the U.S. Securities and Exchange Commission was looking at whether JPMorgan Chase & Co'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.
JPMorgan has said it is cooperating with the probe.
Apart from the four banks named in this story, Reuters could not determine how many other banks are under scrutiny. Continued...