JPMorgan Chase’s descent from Washington’s favorite bank to regulatory whipping boy continued today when investors finally got a chance to react to a late Saturday New York Times report that the Securities and Exchange Commission was investigating the bank’s practice of hiring the relatives of prominent Chinese officials.
The bank’s stock opened the day at $52.92, a drop from Friday’s close at $53.29. The stock continued to slide and closed at $51.83. It’s the first time that the stock has sunk below $52 since June, losing more than 2.7% on the day and knocking more than $5 billion off the company’s market capitalization.
One suspicious Chinese hire the SEC is looking into, according to the Times report, was of Tang Xiaoning, the son of a Chinese banking regulator turned chairman of the China Everbright Group, a giant state-controlled financial company. After hiring Tang, “China Everbright has emerged as one of its prized Asian clients,” the Times wrote, which included JPMorgan winning the sole advisory role on a $162 million stock sale of a subsidiary in 2012.
In a statement, a JPMorgan spokesman said, “We publicly disclosed this matter in our 10-Q filing last week and are fully cooperating with regulators.” In its quarterly report filed Aug. 7, JPMorgan said that the SEC’s enforcement division was “seeking information and documents relating to…the Firm’s employment of certain former employees in Hong Kong and its business relationships with certain clients.”
The SEC’s bribery investigation is just the latest regulatory headache for the United States’ biggest bank. Two former London-based traders were charged with conspiracy and fraud last week for their role in so-called “London Whale” trades and reportedly the bank is negotiating a civil settlement with the SEC stemming from the trade. The bank set aside $678 million for litigation costs in the second quarter and a total of $1 billion for the first half of the year.
- A Kentucky clerk continues to defy the Supreme Court by denying marriage licenses to same-sex couples. ›
- The main suspect in last month's bombing of Bangkok's Erawan shrine has been arrested, Thailand's prime minister says. ›
- Hundreds of people have arrived by train to Austria from Hungary on Monday, as European Union asylum rules collapsed under the escalating migration crisis. ›