The Wall Street Company JP Morgan Chase may have illegally breached a line while pursuing money-making deals in China. Federal officials and investigators declare that a resolution amounting to around $264 million have been sealed by the US-based organization and its Hong Kong branch.
The case can be a glimpse into the unlawful practices done by American firms in the Mainland to establish business connections. It is highly likely that the incident will be used by authorities as basis to probe the activities of similar or related companies in China.
According to Andrew J. Ceresney, the Securities and Exchange Commission (SEC) head of enforcement, the investigation will not be the last. However, the road ahead will be uncertain under the new Trump Administration.
Still, the probe sees a larger coverage considering that the sweeping approach, which was initiated last 2013, has included other banking institutions like Goldman Sachs, Deutsche Bank and HSBC.
The latest scrutiny goes deep into JP Morgan's recruitment methods. It has been known that its Mainland division has employed children of Chinese officials to gain trade influence. An extensive examination will later unveil that the candidates are not qualified. The conscripts have only been handling minor or supplementary jobs.
In its defense, the accused company states that the hiring of prominent employees has been an accepted norm in China. However, prosecutors have pointed out that JP Morgan's conscriptions are based on referrals by Chinese officials whose networks become relevant factors to closing business transactions.
It has been learned that to be employed for the company, it is important that a business connection is in place. This procedure has allowed the financial institution to gain a hundred million dollars in revenues.
Despite the broad corruption inside the organization, investigators credit JP Morgan for its full cooperation which is why the penalty handed down has been reviewed and adjusted. The bank has also taken disciplinary actions against nearly two dozen of its personnel that led to the eventual dismissal of six employees.
Brian Marchiony, spokesman for JP Morgan, shares that the recruitment process has been terminated in 2013. Hiring procedures have also been enhanced.
As part of the settlement package, the financial group will pay $130 million and $72 million to the SEC and the Justice Department, respectively. Another $61.9 million payout will be handed to the Federal Reserve Board of Governors.