The Sons and Daughters Program in China

JPMorgan Chase & Co. (NYSE: JPM) just can’t seem to stay out of the headlines, and the news isn’t good. According to the Wall Street Journal, the long-running investigation into the bank’s hiring practices in China has revealed that 222 family members and friends of executives leading three-quarters of the businesses the bank took public between 2004 and 2013 were hired by the bank. During that time period, the bank hired the family and friends upon their being referred by the executives through an internal program called The Sons and Daughters Program. JPM released the information on these hires in the federal bribery investigation against it. Investigators are currently focusing on whether the hiring in turn led to favorable treatment in the resulting deals, which would violate criminal law.

This latest news comes just a short few weeks after an earlier report by the Wall Street Journal detailing a separate criminal investigation into the actions of JPMorgan Chase executives, which is looking at whether their packaging of bad mortgage products into securities amounted to fraud. Just in May, the bank, along with five of the other largest banks, agreed to pay fines totaling $5.9 billion for reportedly manipulating the Euro-dollar exchange market.

Performance and Comparison With Competitors

In the third quarter, JPM’s revenue dropped by 6.9 percent, and the bank reported earnings per share of $1.32, below the $1.38 estimated by market analysts. In its fixed income and commodities account, or FICC, which makes up around 40 percent of the bank’s investments, JPM reported a 42 percent drop over last year, with a decline of $400 million. A competitor, Wells Fargo & Company (NYSE: WFC) is currently being investigated for allegedly encouraging their bankers to use fraudulent means to drive sales goals and profits. By contrast, Old Second Bancorp, Inc. (NASDAQ: OSBC) showed growth in its net interest income margins from 63.25% to 69.49% in the third quarter, and the stock continues to perform well.