A U.S. government investigation into a JPMorgan hiring program in Asia concluded with a multi-$264 million settlement. The SEC found substantial evidence that J.P. Morgan offered prestigious jobs to the children of Chinese government officials in exchange for the officials’ influence to secure lucrative investment-banking assignments – a violation of the Foreign Corrupt Practices Act (FCPA).
In 2006, JPMorgan APAC created a referral program known internally as the “Sons & Daughters Program.” According to the SEC order, the initial goal of the program was to accommodate frequent requests “to hire the relatives and friends of senior executives or officials with its clients, prospective clients, and contacts within foreign government ministries” by offering targeted entry-level and short-term employment opportunities.
Compliance Officer Chris Charnock’s Concerns Dismissed by JPMorgan Management
While the program may have been created in good faith in the beginning, by 2011, JPMorgan employees in Asia were already trying to raise concerns with compliance executives in New York that the bank might be charged with bribery.
But the reports, which originated with Chris Charnock, an Asia-based compliance officer, were dismissed by higher management until the alleged misconduct attracted the attention of the Securities and Exchange Commission.
According to SEC information, JPMorgan violated three different provisions of the 1934 Securities Exchange Act: anti-bribery, books and records, and internal controls.
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