JP Morgan hiring
problems exposed
JP Morgan’s legal woes continue after the release of emails relating to its hiring practices. US prosecutors and regulators are
investigating the Asian hiring practices of JP Morgan and several other banks, after allegations that people were hired for
their access to key Chinese government figures.
The latest case involves Gao Jue, the son of China’s current commerce minister. According to the emails, Gao Jue
did poorly in his job interviews and was described as being
“immature, irresponsible and unreliable,” once he began
working at JP Morgan. When Jue received notification of
possible severance during staff cut backs, his father said he
would be willing to “go extra miles” for the bank, if it kept
him on, according to a JP Morgan executive’s email account
of a dinner with the Commerce Minister.
The investigation focusses on the Foreign Corrupt Practices Act, a US law that bars giving anything of value to foreign government officials for a business advantage. It has
been reported that the Justice Department and the Securities
and Exchange Commission expect to reach a settlement with
JP Morgan, related to the US anti-bribery law.
Hiring practices investigations show the lengths US lawmakers will go to enforce their powerful act. It is an important reminder of how careful businesses need to be, particularly if their business touches US borders.
Hong Kong
regulator alleges
misleading
research
Misleading research is in the cross-hairs of the Hong Kong
regulator, the Securities and Future Commission (SFC). The
SFC is investigating US ratings firm Moody’s Investors Service and Citron Research for releasing what it claims were misleading reports on Hong Kong-listed companies. The reports
proved to be false and resulted in the share price of the companies involved to fall.
Cases of regulators pursuing brokers and ratings firms for
the contents of their reports are uncommon; however, in recent months, the Hong Kong regulator has been involved in
several cases.
Last year, the agency fined Moody’s $3 million for the report on 61 listed Chinese companies that highlighted areas,
such as weak corporate governance and accounting practices.
The report—Red Flags For Emerging Market Companies:
A Focus on China—sent shares and bond prices at some of
these companies tumbling, even as some of them disputed
the allegations. In November, the SFC said that the report
breached provisions under the code of conduct for people
under its jurisdiction.
Moody’s Investors Service began an appeal in January
against the fine. The case is before the Hong Kong’s Securities
and Futures Appeals Tribunal (SFAT).
Analyst reports are becoming an emerging risk and compliance risk in Hong Kong and elsewhere. While the SFC has
not indicated publicly that it is paying any greater attention to
analyst reports and said it routinely scrutinises what it considers market misconduct, it does appear the regulator is applying
extra scrutiny on, “analysts in terms of factual statements that
they are publishing in their reports.”