US regulators have launched a probe on whether JPMorgan Chase has appointed children of top Chinese officials and politicians to gain commercial benefits in the world’s second-largest economy. This move may throw light on the ugly side of the business practices of Wall Street banks.
The US Securities and Exchange Commission (SEC) has asked the financial services giant to provide information and documents related to the appointment of its employees in Hong Kong, besides its commercial relationships with certain business customers.
The Chinese government, however, has not launched a probe yet into hiring practices of JPMorgan in the country.
The investigation may look into the bank’s erstwhile appointments of Tang Xiaoning, the son of China Everbright Group’s chairman, and Zhang Xixi, the daughter of a Chinese railway official, reported the Financial Times citing familiar person.
The investigation is likely to through light on foreign banks that secure new businesses by hiring children of well-known people in China, as part of their attempts to grow their business.
Earlier, Goldman Sachs appointed Jiang Zhicheng, grandson of the former Chinese president Jiang Zemin, for its direct private investment division.
US has rarely conducted probes into the business practices of the Wall Street firms in China. However, that seems to be changing in the recent times. Last year, a former adviser with Morgan Stanley, was sentenced to prison over bribery charges.
Over the last few years, with the growth of local private equity firms, overseas banks have been finding it difficult to appoint children hailing from powerful families in China.
The latest investigation, which was first reported by the New York Times, will now add to the regulatory problems of JP Morgan, which has facing a suite of probes on London Whale trading case besides on energy dealings.