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JPMorgan Chase Bank Fined $61.9 Million Fine For Improper Hiring Practices

JPMorgan Chase logo The Federal Reserve Board has levied a $61.9 million fine against JPMorgan bank for "unsafe and unsound" hiring practices. The Federal Reserve Board announced:

"In levying the fine on JPMorgan Chase, the Federal Reserve Board found that the firm's Asia-Pacific investment bank operated an improper referral hiring program. The firm offered internships, trainings, and other employment opportunities to candidates who were referred by foreign government officials and existing or prospective commercial clients to obtain improper business advantages.

The Federal Reserve found that the firm did not 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."

To obtain improper business advantages, the bank operated the improper hiring program from at least 2008 through 2013. The FRB found that the program generally produced lesser qualified candidates. The Order to Cease and Desist and Order to Assess a Civil Monetary Penalty (Adobe PDF) stated:

"... from at least 2008 through 2013, JPMC’s APAC investment banking group operated a referral hiring program whereby candidates who were referred, directly or indirectly, by foreign government officials and existing or prospective commercial clients, and who in most instances were less qualified than non-referred candidates who were hired through the Firm’s standard hiring programs, were offered internships, training, and other employment opportunities in order to obtain improper business advantages for the Firm... Federal law and JPMC’s firm-wide policies prohibit the Firm’s employees from offering, directly or indirectly, anything of value, including the offer of internships, training, or other employment opportunities for relatives of a foreign government official, to foreign government officials in order to obtain improper business advantages... the laws in many foreign jurisdictions in which the Firm conducts business and JPMC’s firm-wide policies prohibit the Firm’s employees from offering, directly or indirectly, anything of value to existing or prospective commercial clients in order to obtain improper business advantages..."

JPMorgan has spotty history worth reviewing briefly. In January 2015, it was one of four banks that settled illegal foreclosure charges with the Massachusetts Attorney General with a $2.7 million payment. In November 2014, both RBS and JPMorgan were part of a group of banks that paid $4.2 billion in fines to U.S., U.K., and Swiss regulators for rigging the foreign exchange, or FX, market. In December 2013, JPMorgan paid $515.4 million to the Federal Deposit Insurance Company (FDIC), $300 million to the California Attorney General, and $13 billion with the U.S. Justice Department to settle charges about the misrepresentation of offering documents for residential mortgage-backed securities (RMBS).

In December 2013, JPMorgan Chase announced a data breach that affected half a million prepaid card customers. U.S. taxpayers also learned that month that much of the huge fines JPMorgan paid were tax-deductible and reduced the bank's tax payments. in September 2013, the Consumer Financial Protection Bureau (CFPB) ordered both Chase Bank USA, N.A. and JPMorgan Chase Bank, N.A. to refund about $309 million to more than 2.1 million customers for illegal credit card practices, where customers were enrolled in credit monitoring services without their authorization and charged for services not delivered.

The latest Consent Order also includes a clause not to prosecute executives. Additional terms of the fine require the bank to modify its hiring practices with oversight by the U.S. Justice Department (DOJ) and the U.S. Securities and Exchange Commission (SEC). Those modifications require improved oversight by senior management and anti-bribery policies.

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