BNY Mellon to pay $14.8m to settle bribery case

BNY Mellon will pay $14.8 million to settle charges that it hired relatives of senior officials from a Middle East sovereign wealth fund in exchange for business, US regulators announced Tuesday.

The Wall Street bank hired three interns, family members of senior officials at the unnamed fund, despite their lacking the professional and educational credentials for the highly selective posts, the US Securities and Exchange Commission said.

The bank "corruptly" provided the internships to these relatives "in order to assist BNY Mellon in retaining and obtaining business," the agency said.

US companies are barred from giving gifts or other items of value in exchange for business under the Foreign Corrupt Practices Act (FCPA).

The internships followed persistent lobbying of BNY officials by two of the sovereign fund's senior officials on behalf of a son in one case, and a son and a nephew in the other.

A bank official referred to one of the requests as an "expensive favor", according to an email cited by the SEC.

BNY Mellon did not interview any of the candidates before offering them internships, the order said, a deviation from standard practice. Once installed in the jobs, two of the interns were confronted by a bank human resources employee for repeated absences from work.

"The FCPA prohibits companies from improperly influencing foreign officials with 'anything of value,' and therefore cash payments, gifts, internships, or anything else used in corrupt attempts to win business can expose companies to an SEC enforcement action," said Andrew Ceresney, director of the SEC enforcement division.

Without admitting or denying the SEC's findings, BNY Mellon agreed to pay $8.3 million in disgorgement, $1.5 million in prejudgment interest and a $5 million penalty.

A BNY Mellon spokesman said the firm is "pleased" to resolve the case.

"As the SEC noted, we cooperated with the SEC throughout this process, and had already taken steps to enhance our existing internal controls and procedures with respect to our internship and hiring practices," the spokesman added.

Ceresney said the case marked the first time the SEC has penalized a company under the FCPA over hiring an intern.

But he declined to comment on other FCPA investigations involving banks and nepotistic hiring.

At least seven large banks, including JPMorgan Chase, Citigroup and Goldman Sachs, have received subpoenas or other written inquiries from the SEC and other regulators about hiring relatives of top government and business officials in China, according to securities filings and people familiar with the cases.