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BNY Mellon FCPA Case Settlement Highlights Foreign Bribery

Following the Bank of New York Mellon’s settlement with the SEC this week, expect to see more Wall Street banks settle foreign bribery allegations involving the practice of hiring relatives of sovereign wealth fund managers.

According to the Securities Exchange Commission (SEC), BNY Mellon hired three family members of two foreign fund officials for highly sought-after internship positions in 2010 at the officials’ request. A BNY Mellon account manager reportedly wrote in a February 2010 email that the company was “not in a position to reject the request from a commercial point of view.”

Although the Middle Eastern foreign fund was not named, the SEC alleged that the hire request came after the fund entered into an agreement with BNY Mellon to manage over $700 million in assets.

The SEC said BNY Mellon violated the Foreign Corrupt Practices Act (FCPA) by providing the unqualified relatives with internships and special privileges. The FCPA was enacted in 1977 in order to maintain transparency and to prevent the bribery of foreign officials.

SEC Enforcement Director Andrew Ceresney said in a statement, “The FCPA prohibits companies from improperly influencing foreign officials with ‘anything of value,’ and therefore… internships or anything else used in corrupt attempts to win business can expose companies to an SEC enforcement action.”

BNY Mellon agreed to a $14.8 million settlement with the SEC. While the bank did have anti-bribery and corruption policies in place, the policies did not address the hiring of relatives of foreign officials.

With this case and its investigation into other banks’ practices of hiring relatives of foreign officials, the SEC has made clear that anti-bribery violations can involve more than bags of cash.

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