Bad publicity for many of Wall Street’s largest firms continues to mount. Reports are leaking that Federal authorities have obtained confidential documents proving that JPMorgan Chase & Co (NYSE:JPM) has been hiring the children of powerful Chinese leaders in order to gain access to state-owned companies and other potential business opportunities. If true, the company may find itself facing charges under the Foreign Corrupt Practice Act.
JPMorgan in hot water
The so-called “Sons and Daughters” program worked by hiring the sons and daughters of China’s ruling elite, and then leveraging these connections to obtain business deals. The documents sound very damaging and JPMorgan Chase & Co (NYSE:JPM) may have difficulty getting off the hook on this one. According to reports, the government has obtained a wide variety of documents, including a spread sheet that showed how many hires converted into successful business deals. The government has also secured numerous emails to support the charges.
Apparently, the program was an “open secret” at JPMorgan Chase & Co (NYSE:JPM)’s Hong Kong office, with top-level officials openly referring to it by name in numerous emails. It does not appear, however, that JPMorgan’s New York-based executives were aware of the program. If this can be confirmed, the company may be able to limit both the damage and bad publicity. So far, the company has been cooperating with the SEC.
Giving out high-paying jobs would be a violation
It appears that the Sons and Daughters program is in direct violation of the Foreign Corrupt Practices Act, which forbids companies from giving anything of value to foreign officials in order to secure improper advantages. Handing out high-paying jobs to family members, even if the official him or herself does not directly benefit, looks to be in violation of the act. Further, the company can be charged merely for intending to influence foreign leaders, so even if the bribery did not result in benefits, the company is still liable.
JPMorgan Chase & Co (NYSE:JPM) has suffered a bevy of bad publicity in recent years. In 2011, the company admitted to improperly foreclosing and overcharging American service members, many of whom were actively deployed in war zones. In 2013, JPMorgan was accused of manipulating energy markets, while in 2009 the company was forced to reach a settlement worth over $700 million dollars with the SEC to settle a case involving the sale of derivatives to Jefferson County, Alabama.
With another high-profile case likely coming against JPMorgan Chase & Co (NYSE:JPM), the company will once again find itself on the ropes. Meanwhile, many Americans remain outraged that Wall Street has prospered in the wake of U.S. bailouts, but corruption and unethical practices appears to still be rampant. Calls for increased regulation or reform will likely increase with each scandal uncovered.