Financial services giant JPMorgan Chase & Co. has agreed to pay $264 million in sanctions resulting from the firm’s referral hiring practices in the Asia-Pacific region. This agreement settles SEC charges that JPMorgan Chase won business from clients and corruptly influenced government officials by giving jobs and internships to their relatives and friends in violation of the Foreign Corrupt Practices Act (FCPA).
According to an SEC order issued today, investment bankers at JPMorgan’s subsidiary in Asia created a client referral hiring program that bypassed the firm’s normal hiring process and rewarded job candidates referred by client executives and influential government officials with well-paying, career-building JPMorgan employment. During a seven-year period, JPMorgan hired approximately 100 interns and full-time employees at the request of foreign government officials, enabling the firm to win or retain business resulting in more than $100 million in revenues to JPMorgan.
“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.”
Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit, added, “The misconduct was so blatant that JPMorgan investment bankers created ‘Referral Hires vs Revenue’ spreadsheets to track the money flow from clients whose referrals were rewarded with jobs. The firm’s internal controls were so weak that not a single referral hire request was denied.”