In the Matter of JP Morgan Chase & Co. (2016)
Case Details
- Case Name
- In the Matter of JP Morgan Chase & Co. (2016)
- Foreign Official
- Unnamed employees and executives from Chinese state-owned enterprises.
- Date of Conduct
-
2006 to 2013
- Nature of Business
- JPMorgan is a Delaware corporation headquartered in New York, New York. JPMorgan offers banking and financial services in North America and worldwide, including the Asia-Pacific region. JPMorgan maintains a class of common stock that is registered with SEC and trades on the New York Stock Exchange. JPMorgan Securities (Asia Pacific) Ltd. (“JPMorgan-APAC”) is JPMorgan’s wholly owned Chinese subsidiary headquartered in Hong Kong.
- Influence to be Obtained
- According to the SEC, between 2006 and 2013, JPMorgan provided valuable jobs and internships to the relatives and friends of certain key executives of its clients, prospective clients, and foreign government officials in the Asia-Pacific region to obtain and retain business or other benefits for the bank. Those benefits allegedly included not only future business, but also assistance from government agencies (who were also clients) for the bank and the bank’s clients in navigating complex regulatory landscapes.
The alleged scheme occurred at JPMorgan-APAC, where the JPMorgan subsidiary allegedly created a client referral program that was used to bypass the company’s standard hiring practices. While non-referral candidates were subjected to a rigorous screening process and competed against other candidates for a limited number of positions, candidates referred through the client-referral program did not compete against other candidates based on merit and, in most instances, were less qualified than the non-referral candidates.
Over the seven-year life span of the client referral program, JPMorgan hired approximately 200 interns and full-time employees at the request of its Asia-Pacific clients. Of the 200 interns and employees, 100 candidates were referred by foreign government officials at more than twenty different Chinese stated-owned enterprises. According to the SEC, JPMorgan officials knew that hiring relatives and friends of foreign government officials for the purpose of obtaining or retaining business posed a risk of violating the FCPA, but nevertheless circumvented internal compliance controls to secure the candidates’ employment.
- Enforcement
- On November 17, 2016, the SEC announced that it had resolved its enforcement action against JPMorgan for violations of the FCPA’s anti-bribery, books-and-records, and internal controls provisions. According to the Commission’s cease-and-desist order, JPMorgan would be required to pay disgorgement of $105,507,668 and prejudgment interest of $25,083,737—for a total sanction of $130,591,405. Separately, the Board of Governors of the Federal Reserve brought an enforcement action against JPMorgan, which included a penalty of $61.9 million. The DOJ separately brought an enforcement action against JPMorgan-APAC whereby the JPMorgan subsidiary was required to pay a $72 million criminal penalty.
- Amount of the Value
- Approximately $100 million.
- Amount of Business Related to Payment
- Not Stated
- Citizenship of Parent Entity
- United States
- Total Sanction
- $ 131,591,405
- Reporting Requirements
- Yes (3 Years)
- Total Combined Monetary Sanction
- $ 264,523,905
Defendants
JP Morgan Chase & Co.
- Citation
- In the Matter of JP Morgan Chase & Co., Admin. Proc. File No. 3-17684 (Nov. 17, 2016).
- Other Statutory Provision
- None
- Disposition
- Cease-and-Desist Order
- Defendant Jurisdictional Basis
- Issuer
- Defendant's Citizenship
- United States
