JPMorgan Chase Pays $264 Million Over What SEC Calls Systemic Bribery Scheme

By:
Chris Gaetano
Published Date:
Nov 17, 2016
SECURITIES-AND-EXCHANGE-COMMISSION-facebook

JPMorgan Chase has agreed to pay $264 million to settle allegations that it gave jobs and internships to relatives and friends of influential government officials and client executives in what the Securities and Exchange Commission called a "systemic bribery scheme." 

The SEC says that the bank's Asian subsidiary created a client referral hiring program that bypassed its normal processes, hiring about 100 interns and full-time employees over a seven year period at the request of foreign government officials, who in turn enabled the firm to win or retain business resulting in more than $100 million in revenues. The SEC said that JPMorgan investment bankers went so far as to create a "Referral Hires vs. Revenue" spreadsheet in order to track the flow of money from clients whose referrals were rewarded with jobs. It added that not a single referral hire request was denied. The SEC said this was all in violation of the Foreign Corrupt Practices Act (FCPA). 

“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.”

The bank agreed to pay $130 million to settle charges from the SEC, $72 million to the Justice Department and $61.9 million to the Federal Reserve Board of Governors, resulting in a total of more than $264 million worth of sanctions due to the firm's referral hiring practice. 

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