JPMorgan Faces Bribery Probe Over China Hirings

NEW YORK, NY - OCTOBER 02:  People pass a sign for JPMorgan Chase & Co. at it's headquarters in Manhattan on October 2, 2012 in New York City. New York Attorney General Eric Schneiderman has filed a civil lawsuit against JPMorgan Chase alleging widespread fraud in the way that mortgages were packaged and sold to investors in the days that lead-up to the financial crisis. The allegations, which were filed in New York State Supreme Court, concern business that transpired during 2006 and 2007 at a now-defunct Bear Stearns, the failed Wall Street firm which was purchased in 2008 by JPMorgan Chase.  (Photo by Spencer Platt/Getty Images)
Photo by Spencer Platt/Getty Images


U.S. regulators are looking into whether JPMorgan Chase (JPM) hired the children of Chinese officials to help it boost its business in China, The New York Times reported.

The Times said Sunday details of the civil investigation were in a confidential U.S. government document that it saw. According to the document, the anti-bribery unit of the Securities and Exchange Commission asked JPMorgan for records about some of the bank's hires in China.

According to the Times, the document shows that the bank hired the son of a former Chinese banking regulator who is now chairman of the China Everbright Group, a state-controlled financial conglomerate. The paper reported that after the chairman's son joined the bank, JPMorgan won several assignments from Everbright.

JPMorgan's Hong Kong office also hired the daughter of a Chinese railway official. The official was later detained on accusations of taking cash bribes in exchange for handing out government contracts, the Times reported, citing the U.S. document and public records.

The woman came to JPMorgan at the time that The China Railway Group was in the process of picking JPMorgan to advise it on its plans to go public. JPMorgan helped China Railway raise more than $5 billion when it went public in 2007.

Information sought by the SEC included "documents sufficient to identify all persons involved in the decision to hire" her, the Times reported.

JPMorgan referred to the investigation in a securities filing earlier this month. It said the SEC's enforcement division is seeking information about the bank's employment of some people in Hong Kong and its businessrelationships with some clients, but didn't give any other details.

On Sunday, JPMorgan issued a statement saying "We publicly disclosed this matter in our 10-Q filing on Aug. 7, and are fully cooperating with regulators." A spokeswoman for the New York bank declined to comment further.

The Times report said it's common for global companies to hire the children of Chinese politicians, but that it's unusual for a company to hire the children of officials of state-controlled companies.

The government document did not definitively link JPMorgan hiring to its ability to win business, or suggest that the employees were unqualified, the Times reported. It also noted that there's nothing illegal about hiring well-connected people, as long as they're qualified for the job.

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f_mills21

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August 18 2013 at 6:46 PM Report abuse +2 rate up rate down Reply