The legal probe on JPMorgan Chase & Co.’s (JPM) hiring practices now extends beyond Hong Kong to countries across Asia, involving more than 200 interns and full-time staff. The initial investigation revealed internal spreadsheets depicting job offers connected with business deals.
The probe began this May with JPMorgan hiring the offspring of influential Chinese government officials. Allegedly, the bank lured people with jobs, and in return, the newly recruited employees had to boost business by exploiting their government contacts and records.
The aforementioned hiring practice breaches the US Foreign Corrupt Practices Act and if the charge is proven, JPMorgan’s business in Asia is likely to suffer. The investigation adds to the legal hassles that are already afflicting the bank.
Further, the probe strengthened with the U.S. Justice Department joining the Securities and Exchange Commission in the scrutiny. On the other hand, a Hong Kong-based JPMorgan spokesperson Marie Cheung affirmed the bank’s cooperation with regulatory bodies during the probe in all possible ways.
Asia, comprising emerging economies, is a lucrative domain for profit-seeking organizations. Major banks in the U.S. are eyeing the region in an attempt to strengthen their foothold in the fastest growing markets. So JPMorgan is no exception.
In a rush to fare better than its peers, the company may have adopted unfair means to expand its business. While it is not a crime to appoint officials with influence, creating perfunctory positions for bolstering the business is illegal. Further progress in the probe alone will reveal as to whether JPMorgan recruited personnel judging their qualifications or not.
In the past, there have been instances in which large banking institutions have indulged in similar malpractices. The Goldman Sachs Group, Inc. (GS) had once hired the former Chinese president Jiang Zemin for its private investment arm.
Moreover, in 2012, a former Morgan Stanley (MS) adviser was imprisoned on accusations of bribing a Chinese official to procure profitable real estate investments for the bank.
JPMorgan currently holds a Zacks Rank #3 (Hold). A better performing bank is BankUnited, Inc. (BKU), which has a Zacks Rank #1 (Strong Buy).
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