The Investment Banks’ Hiring Practices in China: On or Off the Radar of the Foreign Corrupt Practices Act?

Abstract

This study examines the hiring practices of investment banks in China, with a specific focus on JPMorgan's "Sons & Daughters" program. These practices have raised significant legal and ethical questions under the Foreign Corrupt Practices Act (FCPA). The objective is to analyze whether these practices violate the FCPA and to discuss their broader implications for global business ethics and regulatory compliance. Employing a comprehensive literature review, theoretical analysis, and case studies, the research investigates data from legal documents, academic articles, and regulatory reports.

The findings indicate that the "Sons & Daughters" program, and similar hiring practices by other banks, constitute a grey area within FCPA enforcement. The study reveals systematic quid pro quo arrangements where investment banks hire relatives of Chinese officials in exchange for business opportunities, suggesting potential violations of anti-bribery provisions.

The analysis underscores the enforcement challenges of the FCPA in diverse cultural and regulatory environments. It discusses the implications for corporate governance and the global financial industry, emphasizing the need for robust compliance mechanisms and higher ethical standards. The study concludes that while such hiring practices might offer competitive advantages, they undermine fair competition and ethical standards, necessitating stricter enforcement of the FCPA. The paper suggests measures to mitigate these risks and promote ethical hiring practices in the financial sector.