Firm to Pay More than $264 Million to Settle Charges of FCPA Violations

A firm settled SEC, Board of Governors of the Federal Reserve System ("FRB") and U.S. Department of Justice ("DOJ") charges that it had hired individuals referred by foreign officials and other clients in order to obtain improper business advantages in violation of the Foreign Corrupt Practices Act ("FCPA").

The agencies alleged that investment bankers at the firm's subsidiary in Asia created a client-referral hiring program that bypassed the firm's normal hiring process and rewarded job candidates (referred by client executives and influential government officials) with well-paying, career-building firm employment. Moreover, the agencies found that the firm hired approximately 100 interns and full-time employees at the request of foreign government officials over a seven-year period, which enabled the firm to win or retain business resulting in more than $100 million in revenues.

The firm agreed to:

• pay more than $130 million to settle SEC charges;
• pay a $61.9 million civil money penalty imposed by the FRB;
• pay a $72 million penalty imposed by the DOJ;
• enhance the effectiveness of senior management oversight and controls relating to the firm's referral hiring practices and anti-bribery policies; and
• cooperate in further investigation of the individuals involved in the conduct underlying these enforcement actions, and cease and desist from re-employing or otherwise engaging individuals who were involved in unsafe and unsound conduct.

SEC Enforcement Division FCPA Unit Chief Kara Brockmeyer remarked that:

The misconduct was so blatant that [the firm's] investment bankers created ‘Referral Hires vs Revenue’ spreadsheets to track the money flow from clients whose referrals were rewarded with jobs. The firm's internal controls were so weak that not a single referral hire request was denied.