JPMorgan’s Hiring Practices in China Raise Red Flags At the SEC
Earlier in August, it came to light that one of the many investigations regulators had launched into JPMorgan Chase (NYSE:JPM) involved its hiring practices in China as they relate to the Foreign Corrupt Practices Act. A source familiar with the situation told Reuters that U.S. officials were investigating whether JPMorgan’s hiring of or business dealings with the children of well-connected people in China violated the FCPA.
While there is no law preventing companies from hiring well-connected executives or practicing nepotism, hiring their children with the explicit goal of using the act to land new business — mostly underwriting contracts, in this case — could be considered as bribery.
At the time, the investigation looked like it would focus primarily on JPMorgan’s relationship with two particular families. Deals secured with the state-owned financial conglomerate China Everbright group reportedly increased significantly after JPMorgan hired the son of Tang Shuangning, who is Chair of the conglomerate. The firm also hired Zhang Xixi, the daughter of a former railway official who oversaw a company that builds railways for the Chinese government that JPMorgan advised. There have been no accusations of wrongdoing yet, but officials have submitted requests for additional information related to the hirings.