JP Morgan to pay $264m to settle Chinese hiring claims
JP Morgan is to pay $264m (£212.2m) to settle claims it hired relatives of key Chinese decision makers to win work.
The US authorities allege that JP Morgan's Asian subsidiary set up a client referral scheme, distinct from the lender's own hiring processes, to give unfair preference to would-be hires referred by client executives and influential government officials and then granted them lucrative roles at the bank.
The authorities claim that, across seven years, the bank hired around 100 interns and full-time employees to win or hold onto work worth more than $100m of revenues, adding the scheme was carried out in a manner so blatant investment bankers went as far as creating 'Referral Hires vs Revenue' spreadsheets.
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The US banking giant is to pay the Securities and Exchange Commission (SEC) $130m along with a further $72m and $62m to the Justice Department and Federal Reserve Board of Governors respectively.
"JP Morgan engaged in a systematic bribery scheme by hiring children of government officials and other favoured referrals who were typically unqualified for the positions on their own merit,” said Andrew Ceresney, director of the SEC Enforcement Division. “JP Morgan employees knew the firm was potentially violating the Foreign Corrupt Practices Act (FCPA) yet persisted with the improper hiring program because the business rewards and new deals were deemed too lucrative."
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Assistant attorney general Leslie Caldwell, from the Department of Justice's criminal division, added: "The so-called Sons and Daughters Program was nothing more than bribery by another name. Awarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple."
A JP Morgan spokesperson said:
The conduct was unacceptable. We stopped the hiring program in 2013 and took action against the individuals involved. We have also made improvements to our hiring procedures, and reinforced the high standards of conduct expected of our people.
Our long-term commitment to the Asia-Pacific region is as strong as ever.
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Shares in the bank are currently up one per cent at $78.19.