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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
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Richard L. Cassin
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Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
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Marc Alain Bohn
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Bill Waite
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Shruti J. Shah
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Russell A. Stamets
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Richard Bistrong
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Eric Carlson
Contributing Editor

Fed seeks lifetime ban for bankers who ran JP Morgan ‘princeling’ program

The Federal Reserve Board Friday said it will seek fines and permanent bans against two former managing directors at J.P. Morgan Securities (Asia Pacific) Limited who allegedly led an illegal hiring program.

The Fed said Fang Fang and Timothy Fletcher ran the bank’s “sons and daughters” program.

They allegedly won at least $35 million in business for the bank by offering prestigious internships and other jobs to individuals referred by foreign officials, clients, and prospective clients.

The hiring practices violated both firm policies and the FCPA, the Fed said in a statement. 

In addition to lifetime bans from the banking industry, the regulator is seeking a fine against Fang of $1 million and $500,000 against Fletcher.

In November, JPMorgan Chase and the Hong Kong unit where Fang and Fletcher worked — J.P. Morgan Securities (Asia Pacific) Limited — agreed to pay $264.4 million to the DOJ, SEC, and Federal Reserve to resolve FCPA offenses for the illegal hiring practices.

The Fed said the bank didn’t have “adequate enterprise-wide controls to ensure that referred candidates were appropriately vetted and hired in accordance with applicable anti-bribery laws and firm policies.”

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 can be an offense.

In August 2015, BNY Mellon paid $14.8 million to settle SEC charges that it violated the FCPA by giving student internships to family members of officials affiliated with a Middle Eastern sovereign wealth fund.

In March this year, Qualcomm paid the SEC $7.5 million to settle FCPA offenses for hiring relatives of Chinese government officials to win sales.

The Fed said Friday in its formal notice (pdf) that Fang managed the referral hiring program from at least 2008 through 2013.

In June 2009, Fang allegedly told colleagues, “[y]ou all know I have always been a big believer of the sons and daughters program — it almost has a linear relationship with mandates, at least in China. We lost a deal to [a competitor] today because they got chairman’s daughter work for them this summer. I am supportive to have our own program.”

By 2010, Fang was seen within the investment bank as the “gatekeeper” for the referral hiring program and had final sign-off for proposed candidates, the Fed said.

JP Morgan Chase had an anti-corruption policy from at least September 2007. The policy prohibited “offers of anything of value to public officials to secure improper business advantages.” Offering internships and training to the relatives of public officials was cited in the policy as a potential bribery risk under U.S. federal law and other anti-corruption statutes.

Fang attended training courses for the anti-corruption policy and received reminders.

He resigned from the bank in June 2014.

Fletcher helped run the hiring program from 2008. Among other things, he “required bankers to present a business case for potential hires,” the Fed said in its notice (pdf) against him.

Fletcher’s title at the Asia unit was Managing Director and head of the Junior Resources Management Group. In that role he “considered prospective business, the importance of the referring client, and the importance of the referring executive when making hiring decisions,” the Fed said.

Fletcher allegedly prioritized referrals from individuals who were in a better position to award the firm business.

Joan Meyer, a Baker McKenzie lawyer representing Fang, told the Wall Street Journal: “Fang Fang was a respected senior banker at JP Morgan and had an outstanding reputation. He should not have been singled out for administrative action by the Federal Reserve in contrast to so many bankers in the same position and he intends to vigorously dispute these allegations.”


Richard L. Cassin is the publisher and editor of the FCPA Blog.

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1 Comment

  1. That's right kids. keep your heads down at school, study hard at university and then…..the world is your oyster. No, JP Morgan shows exactly how the world actually works.Namely, it works for those in the 'club', those in the top 1%, and no, you probably aren't a member, certainly not if you're from the 99%.

    So, sorry you'll just go and get yourself a teaching job, or something else more fitting to your socio-economic status. If most kids actually knew what awaited then post-graduation the schools, let alone the universities would empty very, very quickly.

    Social mobility is a big fat con, but that's the fairy tale that most kids are fed a diet of from 5 to 25.

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