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Bank of New York Mellon to pay $14.8M settlement
An SEC investigation found that BNY Mellon did not evaluate or hire the foreign officials’ family members through its existing and highly competitive internship programs that have strict hiring standards and require a minimum grade point average and multiple interviews.
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He added: “BNY Mellon deserved significant sanction for providing valuable student internships to family members of foreign officials to influence their actions”.
BNY Mellon has agreed to the payments “without admitting or denying the findings”, the SEC said.
The Securities and Exchange Commission announced Tuesday that the multinational banking and financial services corporation has agreed to pay $14.8 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA).
“We are pleased to reach an agreement with the SEC that allows us to put this matter behind us”, Kevin Heine, a spokesman for BNY Mellon, said in a statement.
BNY Mellon is in hot water over not playing fair with its internship program. All were recent college graduates.
BNY Mellon was first alerted to the SEC’s inquiry in January 2011 and received Wells notices in the third and fourth quarter of 2014.
Although BNY Mellon had an existing FCPA compliance policy in place at the time of the internship decisions, the SEC characterized the company’s controls, including those relating to the hiring of relatives of governmental customers as inadequate, and as providing to BNY Mellon personnel excessively broad discretion in, and insufficient training for, hiring decisions.
One BNY Mellon employee called hiring the interns an “expensive “favor” in an email.
Countries with major sovereign wealth funds include China, Korea, Kuwait, Norway, Russia, Saudi Arabia, Singapore and the United Arab Emirates.
The executive allegedly made numerous follow-up requests and angrily asked about the status of the jobs, calling them an “opportunity” for BNY Mellon, according to the order. The bestowing of coveted work positions has come under scrutiny on Wall Street in the past, including moves by other major banks to hire the children of top Chinese government officials.
In the case of the other official, whose son was hired as an intern at the bank’s London office, a custody relationship manager explained to more senior bank officers, “Its [sic] silly things like this that help influence who ends up with more assets”.
Senior managers were able to approve hires requested by foreign officials with no mechanism to ensure that potential hiring violations were reviewed by anyone with a legal or compliance background.
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But Ceresney said the agency ultimately decided that charging individuals in this case “wasn’t appropriate”.