JP Morgan's legal bills and lobbying expenses must be going out of sight. The SEC announced another investigation into its business practices. JP Morgan may be operating in violation of the Corrupt Practices Act in China. There is a correlation between JP Morgan's business success in China and it hiring practices. JP Morgan won some large deals after hiring relatives of important officials in China. The SEC has to prove that JP Morgan's hiring decisions were intended as "bribes" to officials who were in a position to make decisions in favor of JP Morgan. It is difficult to prove "intent" in a court of law. That is why fraud charges have been rare in the US. Government agencies must prove that bankers "intended" to defraud its customers when they sold toxic securities to them.
Its not clear how the investigation into JP Morgan's practices in China will turn out. Two things are clear, however. Corruption may be rampant in China, and Wall Street banks have successfully entered the huge market in China. Globalization has been very good for our large banks. Their brands are highly regarded in China. It is prestigious for the relatives of important officials to get a job with one of the Wall Street banks.
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