Red Flags: JPMorgan Pinned Down Over Bribery Allegations in China
The gusto with which federal authorities are going after JPMorgan (NYSE:JPM) is, to put it one way, alarming. The firm’s legal troubles began with the post-crisis regulatory crackdown on complex financial instruments and more or less crescendoed with the London Whale loss in 2012. However, while a $6.2 billion trading error may be the biggest blip on the regulatory radar, it certainly isn’t the only one.
Recent reports have surfaced claiming that the Securities and Exchange Commission and the Justice Department are investigating the bank — America’s largest by assets — over alleged violations of the Foreign Corrupt Practices Act. The act, passed in 1977, deals with the accounting transparency and the bribery of foreign officials. It’s the latter aspect that has the bank under the microscope.
Specifically, sources told Bloomberg that the SEC and the DoJ are investigating if JPMorgan hired the children of well-connected people in China in order to land new wealth-management business or, in one particular case, new underwriting contracts.