The Securities and Exchange Commission (SEC) reports that the settlement includes a $130 million disgorgement, a $72 million sanction from the Justice Department, and a $62 million civil penalty issued by the Federal Reserve as a consequence of a consent cease-and-desist order issued.
This concludes a long investigation by U.S. officials who found that the corporation’s Hong Kong subsidiary established a fraudulent hiring program that provided internship and jobs to the relatives of many foreign officials the bank had business with. For more than 7 years, JPMorgan used this improper hiring scheme to corrupt and bribe potential business partners in violation of the FCPA and SEC anti-bribery provisions. Many candidates were patently unqualified for the positions they applied for, and the bank employees even kept a concealed spreadsheet to track the potential benefits that they could provide to the company once hired. The extent of the financial fraud amounts to over $100 million in profits obtained by unlawfully retaining lucrative business deals.
As part of a pilot program that reduces the sanctions and punishment for companies that cooperate with the Government, JPMorgan obtained leniency in the form of a non-prosecution agreement for the corporation itself and its individual employees. The company did, in fact, cooperate with the investigators and helped them obtain critical documents that were otherwise protected by local laws. While in the United States the Freedom of Information Act allows the authorities to freely access public records, Chinese privacy laws could seal them. The bank also made his foreign employees readily available significantly speeding up the entire investigation process. The settlement is going to be used by the SEC as a “roadmap” for other companies who want to self-report or provide full disclosure on their foreign criminal investigations.
