August 20, 2013
The Anti-Bribery Unit (ABU) at the Securities and Exchange Commission (SEC) is investigating JPMorgan & Chase Co (JPM) for allegations that children of Chinese officials were hired as employees to solidify business relations with China.
Arthur Ochs Sulzberger, Jr., member of the World Economic Forum (WEF), formerly known as the Davos Symposium, sits on the board of the New York Times (NYT) who reported that JPM was under civil investigation, according to a “confidential US government document”.
This document details that JPM “hired the son of a former Chinese banking regulator who is now chairman of the China Everbright Group, a state-controlled financial conglomerate.”
Later the Hong Kong office of JPM hired the daughter of an official who worked with the China Railway Group (CRG) who was detained by authorities for accepting cash bribes in exchange for taking on government contracts.
This coincided with JPM collaborating with CRG on financial advisements and a campaign that raised $5 billion in 2007.
The SEC is confident that they have all the evidence they need to “identify all persons involved in the decision to hire.”
The document used by the SEC does not definitively link JPM, the new employees and financial advantage, as the federal government regulators assert; however it does play into many recent revelations between the Obama administration and JPM.
Last July, the Federal Energy Regulatory Commission (FERC) has concluded that JPM was involved in a scam to manipulate energy prices for Californians from 2010 – 2012 using their JP Morgan Ventures Energy Corp (VEC).
JPM agreed in a settlement to $410 million; including a civil penalty of $285 million to be paid to the US Treasury and turn over another $125 million in “unjust profits”.
While JPM agreed to the statements recorded in the settlement with the FERC, they claimed a Glomar response with regard to whether or not they violated FERC regulations and statues.
The FERC exposed numerous ways JPM used stratagem to coerce two electrical wholesalers who managed power grids in California to act as go-between for the power producers and utilities which resulted in exorbitant price hikes for customers.
The expected payout to JPM was $1.5 billion with $2 billion of those profits to surface in 2016. This was obviously a long-term investment.
Software used by those wholesalers that controlled bids from power producers were compromised by JPM to reflect artificially low numbers for electricity produced so that JPM could exploit those averages and gain profits from pricing as it spiked higher the very next day.
One of those wholesalers was California Independent System Operator (ISO), who provided power to VEC through the California state transmission grid.
JPM profited from dealings with ISO in schemes that involved day-ahead trades with manufactured low-prices. In the end, ISO paid tens of millions of dollars because of these fake market prices JPM created in order to make massive profits.
No executives at JPM were penalized; simply fines were attributed to the financial corporation itself.
The Department of Justice (DoJ) is conducting criminal and civil investigations on JPM after they announced their quarterly earnings.
According to documents, JPM must respond to “parallel investigations being conducted by the Civil and Criminal Divisions of the United States Attorney’s Office for the Eastern District of California relating to mortgage backed securities (MBS) offerings securitized and sold by the Firm and its subsidiaries.”
Attorney General Eric Holder explained that the Obama administration’s Financial Fraud Enforcement Task Force (FFET) “will continue to take an aggressive approach to combating financial fraud and uncovering abuses in the residential mortgage-backed securities market,” and is pursuing “a range of additional investigations.”
The DoJ states that losses to investors are estimated at $70 million with an additional $50 million in unanticipated loss in future expectations.