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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

New SEC subpoena asks if BNY Mellon hired government officials

In a securities filing this month, Bank of New York Mellon Corp. said it received a subpoena from the SEC asking about job offers to government officials and internships awarded to their family members.

The SEC’s investigation was launched in 2011 and first focused on whether BNY Mellon and its employees awarded internships to relatives of sovereign wealth fund officials.

The latest filing indicates the probe now covers job offers directly to officials at government-related entities.

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.

Hiring an official or their family member or friend 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 an earlier filing in late January, BNY Mellon said the SEC recommended an enforcement action for possible Foreign Corrupt Practices Act violations related to the bank’s dealings with sovereign wealth funds.

The bank received a so-called Wells Notice in the fourth quarter of 2014. Some current and former employees had received the same notice in the third quarter.

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

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

The Wall Street Journal reported last month that BNY Mellon expects to settle the SEC investigation “in coming months,” according to sources familiar with the matter. The report said the sovereign wealth funds were located in the Middle East.

BNY Mellon didn’t comment on the WSJ report.

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.

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.

In April, the UK Financial Conduct Authority fined two BNY Mellon units a total of £126 million ($185 million) for failing to comply with the FCA custody rules for the safe-keeping of client money. That enforcement action wasn’t related to the SEC investigation of the bank’s hiring practices.

*     *     *

Here’s the full FCPA disclosure from Bank of New York Mellon Corporation in its Form 10-Q filed with the SEC on May 8, 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.

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.

On Jan. 23, 2015, BNY Mellon received an additional subpoena from the SEC expanding the scope of the SEC’s inquiry into the provision of internships and employment opportunities offered to officials and relatives of officials at government-related entities.


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

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1 Comment

  1. All societies have their forms of corruption.

    Corruption is far more complex than the abuse of an official position (to extract bribes).

    What should be ethically regarded as a form of corruption (implicitly influencing results, the role of money in the political system to ensure that real legislation & regulation with teeth are enacted and funded) is unfortunately no longer news.

    Unfortunately, there are few with the luxury of speaking truth to power (nor is there much to gain).

    Unfettered greed and opportunism have won out over principles — just look at the policy of our NATO allies towards Mr. Putin.

    Unfortunately, we have lost much of the moral higher ground.

    Richard, have you thought of seeking the Democratic nomination for president?

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