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SEC expands probe of bank hiring practices

The SEC has expanded its investigation into several large banks’ hiring practices in Asia, requesting more information that could show the firms violated the FCPA by hiring relatives of well-connected officials.

In March, the SEC sent letters to five banks, asking for details about their hiring practices in Asia. This list included Credit Suisse, Goldman Sachs, Morgan Stanley and Citigroup and UBS, The Wall Street Journal reported Wednesday.

The SEC is asking for information about who the banks hired based on referrals, and whether they had special programs dedicated to hiring relatives of influential officials.

Last year, the SEC examined J.P. Morgan Chase’s hiring practices in Asia and the bank’s way of doing business with state-owned companies in China. 

Two whistleblowers reported J.P. Morgan’s controversial “Sons and Daughters hiring program to the Hong Kong Stock Exchange and U.S. authorities.

In February, UBS placed two employees on a leave of absence, including its top capital markets banker in Asia, while the Swiss bank conducted an investigation into the hiring of the daughter of a potential Chinese corporate client.

It can be a violation of the FCPA to link the recruitment or hiring of an unqualified employee to winning a contract or other new business.

For the banks, turning over to the SEC the requested information with individul names could breach local privacy laws in China.

None of the banks have been accused of any wrongdoing and the matter is still a preliminary inquiry.


Julie DiMauro is the executive editor of FCPA Blog and can be reached here.

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