The investigation surrounding JPMorgan Chase & Co.’s JPM hiring of relatives and children of Chinese government officials further extends. The U.S. Securities and Exchange Commission (SEC) has subpoenaed the New York-based banking giant for all of its communications related to 35 Chinese officials including Wang Qishan – who is at the forefront of China’s anticorruption campaign. The news, first reported by The Wall Street Journal, stated that late last month the SEC issued the subpoena.
The subpoena mentions some top government and corporate officials including the Minister of Public Security Guo Shengkun, People’s Bank of China Vice Governor Pan Gongsheng and the chairman of state-owned grain trader Cofco Corp., “Frank” Ning Gaoning.
Further, the SEC has asked JPMorgan to present a list of any officials at six Chinese government agencies who referred job candidates to the bank and provide all communications between the officials and the bank related to job referrals. These agencies include State-owned Assets Supervision and Administration Commission, the China Insurance Regulatory Commission, and the China Banking Regulatory Commission.
Investigation over hiring practices was first revealed by JPMorgan in August 2013. The authorities are investigating whether the bank hired children and associates of Chinese government officials for availing business for the bank.
In its latest quarterly filing JPMorgan stated that it faces investigation by several regulators over the company’s compliance with the Foreign Corrupt Practices Act and other laws regarding its “hiring practices related to candidates referred by clients, potential clients and government officials, and its engagement of consultants in the Asia Pacific region.”
The latest request for information with respect to China’s highest-ranking officials could dent the relationship between the two countries – U.S and China, particularly considering the fact that the SEC has named Wang – one of the most powerful men in China, who stands sixth among the seven members of the Politburo Standing Committee.
Apart from JPMorgan, the regulators are also investigating several other banks regarding their hiring practices in China. These include Citigroup Inc. C, The Goldman Sachs Group, Inc. GS and Morgan Stanley MS.
Currently, JPMorgan carries a Zacks Rank #3 (Hold).
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