JPMorgan may face new scrutiny in China hiring case

For the last three years, JPMorgan Chase's hiring practices in China were at the center of a federal bribery investigation.

Now, just as the bank is preparing to settle with federal prosecutors and the Securities and Exchange Commission, another round of scrutiny has emerged.

JPMorgan’s top regulators — the Federal Reserveand the Office of the Comptroller of the currency— are seeking to impose their own penalties in the China hiring case, according to people briefed on the investigations. In recent days, the Fed sought a $62 million fine from the bank, and the O.C.C. is expected to seek its own punishment, according to the people, who were not authorized to discuss the private negotiations.

Those agencies, which were not previously known to be involved in the case, could announce a settlement alongside the S.E.C. and prosecutors in the coming months.

The Fed and O.C.C. investigations stem from the bank’s efforts to hire the children of China’s ruling elite — and in some cases link those jobs or internships to securing business with Chinese government-run companies. But unlike the S.E.C. and federal prosecutors, the banking regulators are not focused on the bribery aspect of the case, but rather a breakdown in controls and practices that allowed the improper hiring to take place.

The regional headquarters of JPMorgan Chase in Hong Kong. Photo: New York Times

The actions from banking regulators would come on top of the roughly $200 million that JPMorgan is expected to pay to the federal prosecutors in Brooklyn and the S.E.C., the people briefed on the matter said, the majority of which would go to the S.E.C.

With prosecutors, the bank appears to have scored a moral victory by avoiding criminal charges, the people briefed on the matter said. Instead of facing charges, the bank negotiated a rare nonprosecution agreement.

(New York Times)