China woe, be gone
JPMorgan’s $264M ends US probe
JPMorgan Chase on Thursday settled an embarrassing three-year federal probe into the company’s socalled “Sons and Daughters” program, which gave jobs to 200 friends and relatives of Chinese officials in exchange for lucrative work in that country.
The bank, run by Chief Executive Jamie Dimon — who’s currently under consideration by President-elect Donald Trump’s transition team for Treasury secretary — paid $264 million to end the probe by the Justice Department, the Securities and Exchange Commission and the Federal Reserve.
“Sons and Daughters” lasted seven years, until 2013, and generated about $100 million for the bank, according to a cease-and-desist order from the SEC.
“The so-called ‘Sons and Daughters’ program was nothing more than bribery by another name,” Leslie Caldwell, head of the Justice Department’s criminal division, said in a statement.
The program gave high-paying “photocopier” jobs to referrals from JPMorgan VIPs, according to the SEC settlement.
“Referral Hires generally did not meet the minimum educational, grade-point average, or background qualifications that JPMorgan APAC looked for in its non-referral hiring programs,” the SEC said, referring to the bank’s China unit.
And although JPMorgan investment bankers were aware as early as 2006 that the program violated the Foreign Corrupt Practices Act, they didn’t move to stop it for years.
“Confidential, just added son of #2 at [Chinese state-owned entity] to my team. I got room for a lot more hires like this ([competitor investment bank] has 25),” one investment banker wrote in a 2010 e-mail to a colleague.
“They are close to mandating banks for their IPO. We are a strong contender. Blink blink nod nod, can we find a place for his son (they have only approached us in this regard)?” one senior banker wrote in an e-mail during that same year, according to the SEC order.
JPMorgan, in a statement, called the practices “unacceptable.”
“We stopped the hiring program in 2013 and took action against the individuals involved,” the bank’s statement continued. “We have also made improvements to our hiring procedures, and reinforced the high standards of conduct expected of our people.”
The settlement did not sit well with bank critics.
“JPMorgan executives belong in jail, but instead shareholders will foot the bill for what one government official described as ‘systemic bribery,’ ” Bartlett Naylor, financial policy advocate at Public Citizen, said in a statement.
As for Dimon and the Treasury post, the CEO has said that he doesn’t think he’s fit for the Cabinet position. Those close to the discussion have downplayed the speculation.
JPMorgan shares rose 62 cents, to $78.02.
They are close to mandating banks for their IPO. We are a strong contender. Blink blink nod nod, can we find a place for his son (they have only approached us in this regard)? — Senior banker’s e-mail, according to SEC order