JPMorgan to pay $264 million to resolve China hiring probe: SEC, DoJ

Thu Nov 17, 2016 3:06pm EST
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WASHINGTON (Reuters) - JPMorgan Chase & Co (JPM.N: Quote) has agreed to pay U.S. authorities $264 million to resolve allegations it hired the relatives of Chinese officials in order to win banking deals, the U.S. Securities and Exchange Commission and the Justice Department said in statements Thursday.

The SEC and Justice Department had been investigating over several years whether some of JPMorgan’s hiring efforts involved bribes, in violation of the U.S. Foreign Corrupt Practices Act.

The SEC will receive $130 million of the settlement, with $72 million going to Justice and $61.9 million to the U.S. Federal Reserve, which penalized the bank "for unsafe and unsound practices."

JPMorgan did not admit or deny the charges. As part of its settlement with the Justice Department, a Hong Kong unit of the bank admitted to making quid pro quo hiring agreements with Chinese officials to win investment business.

JPMorgan is the first major bank to settle a case over the hiring of "princelings," as the offspring and other relatives of top Chinese officials are popularly known.

In recent years, several other banks, including HSBC (HSBA.L: Quote) and Goldman Sachs [GSGSC.UL], have said their hiring practices in Asia were under scrutiny by U.S. authorities.

The U.S. Foreign Corrupt Practices Act makes it a crime to bribe overseas officials to win business, even if the payments are non-monetary.

A JPMorgan spokesman said in an email: “The conduct was unacceptable.” The hiring program was halted in 2013 and the bank took actions against those responsible, the spokesman said.

Authorities said JPMorgan’s Asia unit created an elaborate program, called “Sons and Daughters,” that allowed clients and influential government officials to recommend potential hires. Those candidates received preferential treatment, bypassing JPMorgan’s normal recruitment practices, the SEC said.   Continued...

A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015.  REUTERS/Mike Segar/Files