Jump to content Jump to menu
Why Register?

Shearman FCPA Website: Cases Logo Shearman & Sterling LLP FCPA.Shearman.com: The One-Stop Resource on the Foreign Corrupt Practices Act

In the Matter of The Bank of New York Mellon Corporation

 
:
The Bank of New York Mellon Corporation
:
SEC Civil
:
August 18, 2015
:
In the Matter of The Bank of New York Mellon Corporation
:
In the Matter of The Bank of New York Mellon Corporation, Admin. Pro. File No. 3-16762 (2015)
:
The SEC's charges are the first instance either the DOJ or SEC have charged a company for violating the FCPA's anti-bribery provisions for the provision of a valuable internship to an official's relative. The case marks a novel interpretation of the "anything of value" element of the FCPA.
:
Financial Services/Financial Institutions
:
2010; 2011
:
Officials from a sovereign wealth fund recognized as a governmental body of an unnamed Middle Eastern country.
:
The Bank of New York Mellon is a New York-based corporation whose common stock is registered under Section 12(b) of the Exchange Act and is listed on the New York Stock Exchange. BNYM and its various subsidiaries provide banking and financial services, including asset and wealth management services, in North America and elsewhere around the globe, including Europe, the Middle East, and Africa.

During the relevant time period, a Middle East sovereign wealth fund (the “Middle East Sovereign Wealth Fund”), a government body responsible for management and administration of assets of an unnamed Middle Eastern country, was a client of BNYM in various capacities. At the time, BNYM allegedly held approximately $55 billion of the fund’s assets. According to the SEC, in 2010 two unnamed officials of the Middle East Sovereign Wealth Fund requested that BNYM provide internships for relatives.

One official, who had authority over allocations of new assets, allegedly requested that BNYM provide internships for his son and nephew and that the request served as an “opportunity” for BNYM. According to the SEC, emails from unnamed BNYM employees indicated that they understood that providing the internships was necessary to retain and obtain business from the fund. After granting internships to the son and nephew, BNYM obtained additional assets from the Middle East Sovereign Wealth Fund to manage.

The second official, a senior official in the European office of the Middle East Sovereign Wealth Fund, also allegedly requested an internship for his son in 2010. The SEC asserts that at the time of this request a number of client service issues threatened to weaken BNYM’s relationship with this European office. According to the SEC, a BNYM manager indicated concerns that another competitor would hire the second official’s son and that BNYM would lose market share. The SEC claims that after hiring the second official’s son, BNYM retained, and was able to further develop, its existing business relationships with the European office of the Middle East Sovereign Wealth Fund.

The SEC claims that while BNYM had established rigorous criteria and processes for hiring interns, the interns hired at the request of the officials did not meet the basic academic or professional requirements for the existing internship programs. The SEC alleges that BNYM agreed to hire the intern before meeting or interviewing them and that BNYM provided a “customized one-of-a-kind training program.” According to the SEC, The interns were offered six-month long internships, significantly longer than typical BNYM internships, and BNYM assisted the three interns to obtain visas. According to the SEC, BNYM management indicated that the internships constituted an “expensive favor” for the officials given the amount of resources expended for these customized internships.

On August 18, 2015, the SEC settled its enforcement action against BNYM for violations of the anti-bribery and internal controls provisions of the FCPA through a cease and desist order. According to the order, BNYM agreed to pay $14.8 million in sanctions.
:
Anti-bribery (Issuer), Internal controls (Issuer)
:
Cease and Desist
:
Cease-and-desist order; $8.3 million in disgorgement; $1.5 million in prejudgment interests; $5 million in civil penalty.
:
14,800,000
:
0
:
Issuer
:
U.S.
:
United States
:
Contract Procurement/Retention
:
Not stated.
:
Scholarship/Education
:
Not stated.
:
No
:
No