On May 7, 2014, the Wall Street Journal reported that US SEC expanded its investigation into large banks‘ hiring practices in Asia. The SEC contacted at least five U.S. and European banks according to WSJ. None of the banks involved has been accused of wrongdoing. What the SEC is trying to investigate is whether any of the banks violated the Foreign Corrupt Practices Act by hiring relatives of public officials to win business in Asia. The probe into the hiring practices of Banks in Asia has started last year. In this second round the SEC is requesting further information including lists of employees hired as a result of referrals from foreign officials and clients. It is not per se prohibited to hire relates of public officials but the SEC is hunting for evidence that may connect unsuitable employment to the winning of a contract by any of the banks. Although the request was only sent out to a group of banks, each international bank should keep an eye on the development of this probe and check whether it would be in a position to adequately respond to a similar request in due course.
Nicolai Behr is a compliance and dispute resolution attorney in Baker & McKenzie’s Munich office. He is a member of the steering committee of GlobalComplianceNews, a compliance news website with global reach moderated by Baker & McKenzie. He is a member of the committee "International" of the German Institute for Compliance. Dr. Behr is a regular speaker on compliance and white collar topics.