JPMorgan Chase & Co. ("JPMorgan"), a Delaware corporation headquartered in New York, was a major banking and financial services firm with operations worldwide. Among the services provided to clients in the Asia-Pacific region were investment banking, private banking, asset management, and commercial banking services. The company’s common stock was registered with the SEC and listed on the New York Stock Exchange.
JPMorgan Securities (Asia Pacific) Ltd. (“JPM APAC ”) was a wholly-owned Hong Kong-based subsidiary of JPMorgan. JPM APAC operated as JPMorgan’s investment banking office in Hong Kong and coordinated JPMorgan’s investment banking operations in the Asia-Pacific region, including in China.
Between 2006 and 2013 investment bankers at JPM APAC created and ran a client referral hiring program which provided “well-paying, career building JPMorgan employment” for the friends and relatives of clients in the Asia Pacific region. These clients included some senior officials at Chinese state-owned and controlled enterprises (“SOEs”). Overwhelmingly, the hires made through the program were otherwise unqualified for positions at JPMorgan and would not have been hired through normal channels. It was understood that these referral hires were made on a quid pro quo basis for lucrative business from JPMorgan’s clients. Over the seven-year period, approximately 200 hires were made under the program, including almost 100 from referrals made by clients at Chinese SOEs, which generated more than $100 million in revenue for JPM APAC.
In an administrative action filed on November 17, 2016, the SEC issued a settled cease and desist order against JPMorgan. Under the terms of the order, JPMorgan was ordered to cease and desist violating the anti-bribery, books & records, and internal controls provisions of the FCPA, to disgorge $105,507,668 plus prejudgment interest of $25,083,737, and to report to the SEC for a term of three years on the status of the enhancement of the company's anti-corruption compliance policies and procedures.
In a related proceeding annouced on November 17, 2016, the DOJ entered into a Non-Prosecution Agreement with JPM APAC with a term of three years. Under the terms of the agreement, JPM APAC agreed to not violate the FCPA, to pay a criminal penalty of $72 million, which was a 25% departure below the bottom of the U.S. Sentencing Guidelines range, and to report to the DOJ for three years on the status of its enhanced compliance policies and procedures.
In addition to the sanctions of $130,591,405 noted above, JPMorgan is also expected to pay $61.9 million to the Federal Reserve Board of Governors.
