J.P. Morgan and the pitfalls of hiring China's elite offspring
Does it pass the smell test? Every senior executive at a large multinational company in China is likely asking this question amid reports that the U.S. Securities and Exchange Commission (SEC) is investigating J.P. Morgan Chase's (JPM) hiring of children of senior Chinese officials in connection with some of its China-related investment deals.
The answer is no. Even if the SEC clears J.P. Morgan of any wrongdoing, the damage to the reputation of the American banking giant will be irreparable. Of course, should the outcome of the investigation go against J.P. Morgan, the legal costs and penalties could be substantial.
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Minxin Pei is a non-resident senior fellow at the German Marshall Fund of the United States as well as the Tom and Margot Pritzker Professor of Government and director of the Keck Center for International and Strategic Studies at Claremont McKenna College.