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Harry Cassin
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SEC recommends FCPA charges against BNY Mellon for sovereign wealth fund practices

Bank of New York Mellon Corp. said the SEC has recommended an enforcement action for possible FCPA violations related to the bank’s dealings with sovereign wealth funds.

In an SEC filing Friday, BNY said it received a so-called Wells Notice in the fourth quarter of 2014, and some current and former employees had received the same notice in the third quarter.

A Wells Notice from the Securities and Exchange Commission advises targets of an investigation that the SEC staff has made a preliminary determination to recommend an enforcement action.

The SEC’s investigation of BNY focuses on whether the bank and its employees awarded internships at BNY to relatives of sovereign wealth fund officials. The FCPA prohibits companies listed or based in the U.S. from giving “anything of value” to a foreign official to obtain or retain business.

The SEC told BNY Mellon in January 2011 that it was investigating the bank’s practices in connection with sovereign wealth funds. BNY hasn’t identified what sovereign wealth funds might be involved.

In March last year, the SEC reportedly sent letters to five banks asking for details about their hiring practices in Asia. The banks were Credit Suisse, Goldman Sachs, Morgan Stanley, Citigroup, and UBS.

The SEC and DOJ are investigating whether hiring decisions at JPMorgan were made to win business from Chinese companies in violation of the FCPA.

Hiring a family member or friend of a government official isn’t always a violation of the FCPA. But a hiring decision intended to reward or induce an official to award work could be an offense.

In February last year, UBS placed two employees on a leave of absence during an investigation into the hiring of the daughter of a potential Chinese corporate client.

BNY Mellon said in its disclosure Friday that it has “fully cooperated” with the SEC. It said resolution of the issue isn’t likely to have a material effect on its finances or operations.

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Here’s the full FCPA disclosure from The Bank of New York Mellon Corporation in its Form 8-K filed with the SEC on January 23, 2015:

In January 2011, the Enforcement Division of the U.S. Securities and Exchange Commission (the “SEC Staff”) informed several financial institutions, including BNY Mellon, that it had commenced an inquiry into certain of their business practices and relationships with sovereign wealth fund clients. BNY Mellon has fully cooperated with the SEC Staff’s investigation. In the third quarter of 2014, the SEC Staff issued Wells notices to certain current and former employees of BNY Mellon, informing them that the SEC Staff has made a preliminary determination to recommend enforcement action against them for alleged violations of the U.S. Foreign Corrupt Practices Act in connection with the provision of a limited number of internships to relatives of sovereign wealth fund officials. BNY Mellon received a similar Wells notice in the fourth quarter of 2014. Although it is not possible to predict the ultimate resolution or financial liability with respect to this matter, BNY Mellon is currently of the opinion that the outcome of this matter will not have a material effect on BNY Mellon’s business, financial condition or results of operations.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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