JP Morgan in Regulatory Hot Water

JP Morgan Chase Tower/ Flickr CC via Brandi Korte

  While it seems to have skated by in the aftermath of the financial crisis, JP Morgan is currently under a microscope from regulators such as the Securities and Exchange Commission (SEC) and   The mega bank is being investigated for potentially hiring bankers in exchange for receiving new accounts overseas by the SEC, which would violate the U.S. Foreign Corrupt Practices Act.  Various sources are now reporting the Justice Department is probing into a case recently settled in California in while JP Morgan bankers may have manipulated energy markets.

now the U.S. Justice Department.

  The anti-bribery unit at the SEC is investigating JP Morgan over two and potentially more hired Chinese employees at the bank.  In Hong Kong, JP Morgan hired the daughter of a Chinese railroad official.  Around the same time The China Railway Group chose JP Morgan as its advisor to make a public offering.  According to an official document sent to the New York Times, regulators have asked for records on other Chinese hires from the bank.

  In China, business culture centers on the exchange of favors and relationships.  Bringing in employees or new business based on familial ties or connections is considered normal and legal.  In the United States, however, it can legally be construed as corruption.  This has created a gray area in regard to whether or not U.S. regulators can identify deliberate tit for tat behavior from banks in their overseas branches.  The laws have made hiring Chinese nationals much more difficult.

 

Preet Bharara/ Flickr CC via Azi Paybara

U.S. Attorney Preet Bharara is leading an investigation in JP Morgan’s energy division practices.  Last month the bank settled a case in which they paid $410 million to regulators over an accusation that it manipulated energy markets through grossly inflated payments.  This is the seventh known active investigation opened by the Justice Department against the bank.  Several weeks ago Bahrara accused the bank of hiding six billion in losses from corrupt trading.