One of JPMorgan's top China executives, Fang Fang, is retiring amid an investigation into the bank's "Sons and Daughters" hiring program. Though he has not been accused of wrongdoing, Fang, who's only 48, was instrumental in the hiring of Tang Xiaoning. Tang is the son of the chairman of the China Everbright Group, Tang Shuangning. After hiring the young Tang, JPMorgan won business assignments with the China Everbright Group.
By all accounts, winning business is why the Sons and Daughters program was created — it places well-connected candidates in a separate hiring track from regular candidates. Fang himself said in an email obtained by the Securities and Exchange Commission that the program has "almost has a linear relationship" with winning business assignments. Unfortunately for JPMorgan, the program's hires may violate the Foreign Corrupt Practices Act. If the SEC can link JPMorgan's hiring of the children of Chinese government officials and business leaders to winning assignments on investment banking deals, the bank is in trouble.
The Wall Street Journal reports that Fang's official reason for retiring is to spend more time with his family. According to someone familiar with the matter, "the decision [to retire] was made by him." At this time, the bank is cooperating with investigators — it's released many emails discussing the Sons and Daughters program and the hiring of Tang specifically.
One such email showed that a Chinese regulator appealed to JPMorgan CEO Jamie Dimon himself to hire a young job applicant as a "favor." That applicant now works for the bank. Dimon is not suspected of any wrongdoing.