JPMorgan hiring ‘scandal’ settlement shows US regulators justifying their existence
Where is the bribery in the New York-based bank’s so-called ‘Sons & Daughters’ scheme?
JPMorgan Chase & Co will pay US$264 million to the US government to settle allegations that it had hired the children and relatives of influential Chinese policymakers or officials in the hope of winning their business, the US Securities & Exchange Commission said in a statement on Thursday.
The settlement ends a three-year investigation into whether the hiring practice at the New York-based bank had breached US anti-bribery laws.
SCMP, November 18
Time to be a little un-PC. Will someone please tell me how much trouble the children of rich New Yorkers have in finding jobs or how New Yorkers can then call it bribery when their Shanghai counterparts copy their ways?
When this so-called “scandal” first blew up a few years ago, a friend working in a smaller non-American financial services firm told me had been hiring busily the previous week. A big New York bank had asked him to take their Shanghai kids on his books to hide them.
I doubt any of them are there any longer. My own experience of this sort of thing many years ago was that a good number of the kids could not even last a week.
Of course we helped them on their way out by heaping their desks with random contents of the clippings library and then telling them to brief themselves on this drudgery. The young women among them mostly tried. Few of the young men did but they could always redeem themselves by downing four pints in 40 minutes at the old Bull and Bear.
Those who passed our trials by ordeal turned out surprisingly often to be excellent hires. I think there were, and still are, good reasons for this. For one, if family gets them their jobs then they are upholders of family honour and will not lightly shame it.
Given their family backgrounds, they are usually also socially adept, have an instinctive understanding of the business they have entered and already have good connections or can easily establish them. That’s a winning formula for investment bankers.
And, yes, this can crowd out people who want to be investment bankers but do not have that social background.
Equally, however, it is rare to see the children of well-to-do families take a place as big swinging traders on the dealing desk, bellowing out their market calls in four letter words.
For this job you want people who can keep the last minute prices of a thousand securities in their heads at all times. No, I don’t know how they do it but they do, and they do not generally come from polite society although they make easily as much money as the socially accomplished bankers.
This leaves the nerds between these two groups, neither the best paid nor the most socially adept. In banking, “nerd” is defined as the investment analyst. I spent almost 20 years as a nerd.
But back to my topic of the day. Where is the bribery? I suppose you might say that when a bank hires the children of a client company’s executives, and such hirings are not a recognised perk of executive status but are deemed to be a significant benefit, then the bank offends if it may have reason to believe that the company did not, or is unlikely to, disclose this benefit to other shareholders.
Yet here we have a country where this is in fact a recognised perk of executive status, where it is not a significant benefit (it isn’t one anywhere in truth) and where few if any other shareholders care or see any reason why anyone should.
It still allows regulators in New York, however, to try to justify their existence by creating mountains out of molehills thousands of miles away from their own patch.
Notice also that once again they have smeared their victims with criminal taint although achieving no criminal conviction against them. They just threaten them with years of expensive legal process and then offer a blackmail price to go away, one condition of which is that the victims agree not to deny the criminal smears in public.
Give me nepotism in preference any day.