A probe into US banking major JPMorgan Chase & Co's hiring practices for gaining undue business advantage is likely to expand across Asia due to the emergence of further evidence showing alleged malpractices.
Bloomberg News reported, citing people with knowledge of the matter, that the probe by the US Securities and Exchange Commission (SEC) found an internal spreadsheet linking the bank's appointments to specific deals pursued by the bank.
The sources said that the US Justice Department has joined the SEC in the probe to examine whether JPMorgan hired relatives of those influential in government and elsewhere. The company is facing probe under the US Foreign Corrupt Practices Act, as hiring people with the aim of winning more business from relatives is considered bribery.
The probe began in Hong Kong over the hiring of the son of the chief of a state-controlled financial conglomerate as well as the daughter of the state-controlled China Railway Group, whose public offering was handled by JP Morgan.
It has now expanded to countries across Asia, and will look into the appointment of interns as well as full-time workers, according to Bloomberg's sources. They noted that the suspected appointments include influential politicians' family members and relatives of asset management clients.
JPMorgan earlier opened an internal investigation into more than 200 appointments is Asia and said it will share the results with regulators.
According to a Reuters' source, the investigation is still in preliminary stages and the bank is yet to conclude the appointments were illegal.
The internal investigation is part of the bank's attempt to repair its tainted image in connection with a number of scandals. When companies help in investigation and admit wrongdoings, the regulators are likely to be more lenient over punishments.
The bank is already facing several other regulatory headaches, including the notorious London Whale scandal.
Spanish police earlier arrested Javier Martin-Artajo, the former JPMorgan Chase banker accused of hiding hundreds of millions of dollars in losses stemming from the trading scandal. The bank lost over $6.2bn (€4.7bn, £4bn) from the London Whale scandal during 2012.
Housing finance authorities in the US are demanding fines up to $6bn to settle lawsuits over mis-selling securities to state-backed mortgage companies, Fannie Mae and Freddie Mac.
That was on top of a planned fine of $80m by the US Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau over the bank's improper dealings with retail customers during the recession.
In July, JPM agreed to pay the Federal Energy Regulatory Commission $410m in penalties and disgorgement for its role in manipulating the electricity markets in California and the Midwest from September 2010 to November 2012.
The bank has spent about $10bn on various lawsuits over the past two years. For the current fiscal year, JPMorgan raised its reserves to cover legal costs to $6.8bn at the end of June from $6bn three months before.
Probe Beyond JPMorgan
The Wall Street Journal reported, citing people with knowledge of the situation, that the SEC is widening its investigation over hiring practices into other banks and hedge funds.
However, the Journal did not identify the banks and hedge funds that have been probed by US authorities.