In November 2016, JPMorgan Chase (JPM) and its subsidiary, JPMorgan Securities (Asia Pacific) Limited (JPM-APAC) resolved its long running Foreign Corrupt Practices Act investigation and enforcement, obtaining a non-prosecution agreement (NPA) from the Justice Department with a penalty of $72M, agreeing to a cease-and-desist order (Order) from the Securities and Exchange Commission, with a penalty consisting of profit disgorgement and interest of $135 million, and reaching an agreement with the Federal Reserve Bank for a consent cease-and-desist order (Fed Order) to put in place a best practices compliance program and pay a penalty of $61M.
The conduct involved JPM-APAC’s Client Referral Program, named the “Sons & Daughters Program,” which targeted children of high Chinese government officials and employees of state owned enterprises, together with other close family members and even close friends and associates of these officials and employees, for hiring in a blatant attempt to win business. It was designed, created, and implemented by the top management of JPM-APAC, which went so far as to keep a tally of those persons hired by JPM-APAC and JPM to specific business development. As noted in the NPA, “certain senior executives and employees of (JPM-APAC) conspired to engage in quid pro quo agreements with Chinese officials to obtain investment-banking business, planned and executed a program to provide specific personal benefits to senior Chinese officials in the position to award or influence the award of banking mandates, and repeatedly falsified or caused to be falsified internal compliance documents in place to prevent the specific conduct at issue.” The language quid pro quo is replete throughout the settlement documents because that is the specific language used by JPM-APAC personnel when discussing Sons and Daughters.
