JP Morgan in US probe over links to influential Chinese

JP Morgan has been asked for details over its hiring practices in Hong Kong

US authorities are investigating investment bank JP Morgan over claims it hired children of influential Chinese officials to gain business.

One claim is that it hired the son of a one-time bank regulator, now head of investment firm China Everbright.

China Everbright and JP Morgan went on to complete a series of deals together.

JP Morgan said earlier this month it had had a request for details of the matter from US watchdog the Securities and Exchange Commission (SEC).

The news was brought to light this weekend by The New York Times newspaper.

The paper also said the Hong Kong office of the bank had employed the daughter of a Chinese railway official as The China Railway Group chose JPMorgan to advise it on a public flotation in 2007 when it raised $5bn (£3.2bn).

The official was later arrested in connection with a bribery scandal.

Relationships

The New York Times said the SEC document did not show any direct link between JPMorgan's hiring policy and any business that followed.

There is also no suggestion that the employees were not suitable for the positions they were hired to fill, or that they helped JPMorgan secure business. The bank has not been accused of any wrongdoing.

News of the SEC's request for information had appeared earlier this month in routine filing of a document running to several hundred pages.

The document stated: "A request from the SEC Division of Enforcement seeking information and documents relating to, among other matters, the Firm's employment of certain former employees in Hong Kong and its business relationships with certain clients."

A company spokesman said the firm was "fully cooperating with regulators".

The SEC confirmed there had been a request for "information and documents relating to, among other matters, the firm's employment of certain former employees in Hong Kong and its business relationships with certain clients".

News of the investigation follows another brush with the US authorities last week, when two JP Morgan Chase traders were charged with fraud in connection to the $6.2bn "London whale" trading losses.

These charges have been denied.