Business

JPMorgan to pay $264M to settle foreign corruption charges

by Sylvan Lane 11/17/16 11:18 AM CST

JPMorgan Chase will pay $264 million to settle charges that a Hong Kong-based subsidiary hired more than 100 interns and full-time employees at the request of government workers, winning lucrative contracts in exchange.

{mosads}The bank will pay $130 million to settle charges from the Securities and Exchange Commissionfor violating the Foreign Corrupt Practices Act, the SEC announced Thursday. The bank was also charged with violating SEC anti-bribery, record-keeping and internal control rules.

The program in question brought in roughly $100 million in revenue for JPMorgan, the SEC said.

“JPMorgan engaged in a systematic bribery scheme by hiring children of government officials and other favored referrals who were typically unqualified for the positions on their own merit,” said Andrew J. Ceresney, director of the SEC Enforcement Division.

“JPMorgan employees knew the firm was potentially violating the FCPA yet persisted with the improper hiring program because the business rewards and new deals were deemed too lucrative.”

JPMorgan will also pay $72 million to the Department of Justice and $61.9 million to the Federal Reserve Board of Governors.

JPMorgan Securities Limited, based in Hong Kong, started the “Sons and Daughters” program in 2006, according to the Justice Department. The arrangement helped JPMorgan secure major contracts in exchange for hiring unqualified but well-connected employees. Many of these employees were paid as investment bankers merely for proofreading and office keeping.

“The so-called Sons and Daughters Program was nothing more than bribery by another name,” said Assistant Attorney General Leslie Caldwell. “Awarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple.”

A spokesman for JPMorgan called the hiring practice conduct “unacceptable.”

“We’re pleased that our cooperation was acknowledged in resolving these investigations,” said Brian Marchiony. “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.”