Federal probe into JP Morgan's hiring practices widens beyond China
05 November 2013
A federal probe into the hiring practices of JP Morgan Chase has widened beyond China, where the lender is said to have hired the children of powerful Chinese officials to win lucrative business in the country.
In a securities filing on Friday, the bank disclosed that the authorities were now looking into "its business relationships with certain related clients in the Asia-Pacific region and its engagement of consultants in the Asia Pacific region." The bank made no mention of where the inquiries were directed.
However, according a report in The New York Times which cited people briefed on the matter, the bank's hiring practices throughout Asia, South Korea, Singapore and India were under the lens.
According to the people, the scrutiny follows JP Morgan having itself flagged the countries for further review.
The investigations by the Securities and Exchange Commission and the justice department, the people said, were still in fledgling stages. The people who requested anonymity said Hong Kong and British authorities were also investigating the bank's hiring practices.
According to the report, it was still not clear whether authorities suspected improper activity in these regions beyond China, or were simply placing a marker for a possible broader investigation.
The latest investigation into JP Morgan's activities comes just days following the US banking giant entering into a $13-billion settlement with the federal government over its mortgage practices in the run-up to the financial crisis.
Federal authorities led by the SEC's anti-bribery unit launched an investigation into the bank's hiring of the sons and daughters of China's elite.
It emerged that the bank had hired the daughter of a Chinese railway official and also the son of Tang Shuangning, a former Chinese banking regulator who now chaired the state-controlled financial conglomerate China Everbright Group, a confidential government document reviewed by NYT revealed.
According to the report, the bank had even created a formal, "Sons and Daughters" programme in 2006 after friends and family of China's elite vied for positions at JPMorgan.
The report said that what started off as an effort to ferret out nepotism and avoid bribery accusations in the US became a two-tiered process. It added, those well-heeled applicants appeared to enjoy less stringent standards and fewer interviews. It said in some cases, JPMorgan won business from companies with ties to the children.