Today, it became clear that for JPMorgan Chase, things are going to get worse before they get better.
In a bombshell news report, the New York Times says that JPMorgan executives based in Hong Kong hired a company belonging to “Lily Chang,” a pseudonym for Wen Ruchun, the daughter of former Chinese Prime Minister Wen Jiabao. Wen Ruchun’s small consultancy was paid $75,000 a month, ostensibly to help smooth the way for the bank’s business dealings in China. JPMorgan declined to comment.
The Times does not suggest that JPMorgan ran afoul of any laws based on its reporting. But the optics are still very bad.
The revelations come at a time when JPMorgan is trying to get out from under a handful of regulatory investigations into the bank’s practices: It is believed to be on the verge of settling for around $13 billion with the Justice Department over sales of mortgage securities leading into the financial crisis. The company settled a few weeks ago with the SEC and the CFTC over losses incurred by the London Whale. But other probes are ongoing. Prosecutors and the SEC are examining JPMorgan’s activities in Asia to see whether the company violated the Foreign Corrupt Practices Act; the U.S. Attorney in Sacramento is leading a criminal investigation into its sales of mortgage bonds; and Manhattan U.S. Attorney Preet Bharara is looking into JPMorgan’s dealings with Bernard Madoff.
As if that weren’t enough, the largest bank in the U.S. learned a painful lesson about just how snarky the Internet is when it ventured boldly into the world of social media. JPMorgan Chase announced that it would be holding a question-and-answer session with Jimmy Lee, one of its top investment bankers, last night on Twitter. The company cancelled the event less than six hours after announcing it, after it was overwhelmed by a storm of Twitter traffic with the hashtag “#AskJPM.” One representative tweet that was retweeted 450 times: