Updated Sunday, July 13, 2014 as of 8:39 PM ET
Practice - Regulatory/Compliance
JPMorgan China Hiring Probe Spreads to 5 More Banks, NYT Says
by: Hugh Son
Monday, December 9, 2013
Partner Insights

(Bloomberg) -- Goldman Sachs Group and Deutsche Bank AG are among five Wall Street firms in addition to JPMorgan Chase whose hiring practices in China are being probed by U.S. regulators, the New York Times reported.

Citigroup, Morgan Stanley and Zurich-based Credit Suisse Group AG also are facing SEC investigations, which are at an early stage, the newspaper said yesterday, citing interviews with people briefed on the matter. JPMorgan recently gave authorities spreadsheets and e-mails detailing the firmís Sons and Daughters hiring program, according to the Times.

U.S. authorities are examining whether JPMorgan violated anti-bribery laws by hiring the children and other relatives of well-connected politicians and clients in China in exchange for having business steered to the firm, a person with knowledge of the investigation said in August. Bloomberg News reported that month that a probe of JPMorgan had uncovered an internal spreadsheet that linked appointments to specific deals.

A senior JPMorgan executive in Hong Kong wrote that the hiring program has an almost direct correlation with winning deals to advise Chinese companies, the Times reported, citing one of the e-mails it said were obtained by U.S. authorities. The executive wrote that the father of a job candidate was chairman of China Everbright Group, the state-controlled financial firm, according to the newspaper.


JPMorgan ended plans to manage China Everbright Bankís Hong Kong share sale amid the scrutiny of its hiring practices, two people with knowledge of the matter said last month. The U.S. firm told Everbright that it would quit the deal because the investigation delayed an internal approval process, the people said. The sale, at $2 billion, would be the largest first-time offering by a Chinese lender in Hong Kong since 2009.

The spreadsheets included about 30 employees with connections to state-owned firms or Communist Party officials, including the daughter of the deputy minister of propaganda and a relative of a financial regulator, the New York Times reported. The documents gave no indication that executives at JPMorgan headquarters in New York knew of the hiring practices, the newspaper said.

JPMorgan opened an internal investigation that flagged more than 200 hires for review, two people with knowledge of the examination said in August. The U.S. Justice Department joined the SEC in examining the bankís hiring practices in China, one person said. U.S. prosecutors in Brooklyn, New York, are involved in the probe, the Times reported yesterday.

Spokesmen for JPMorgan, Citigroup, Morgan Stanley and Goldman Sachs, all based in New York, declined to comment, as did the SEC and Justice Department. Spokesmen for Frankfurt- based Deutsche Bank and Credit Suisse didnít immediately respond to requests for comment.

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