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August 18, 2015 at 10:43 AM
The Securities and Exchange Commission announced that BNY Mellon has agreed to pay $14.8 million to settle charges in connection with three valuable student internships it provided to the family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund.
The internships were in violation of the Foreign Corrupt Practices Act (FCPA), according to the SEC.
“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 J. Ceresney, director of the SEC Enforcement Division, in a statement released Tuesday.
This is the first FCPA action the SEC has filed against a financial institution. And, this is the SEC’s first FCPA case involving internships.
The SEC investigation found that BNY Mellon provided the internships to influence government officials in order to win and retain business from a sovereign wealth fund in the Middle East.
“The internships were highly valuable to the foreign officials who specifically requested them and in one instance asked that the request be kept confidential from his employer,” Ceresney said during a conference call with media on Tuesday afternoon.
Some of the emails between BNY Mellon employees – cited in the SEC’s order instituting a settled administrative proceeding – demonstrate that the internships were designed to influence the foreign officials, Ceresney said.
“For example, one account manager wrote to another employee that BNY Mellon was ‘not in a position to reject the request from a commercial point of view,’ Ceresney said. “And, ‘by not allowing the internship to take place we potentially jeopardize our mandate with the Middle Eastern sovereign wealth fund.’ In another email, a relationship manager wrote that an official’s request for an internship was likely to ‘influence any future decisions taken within the Middle Eastern sovereign wealth fund.’”
The SEC did not name the Middle Eastern sovereign wealth fund involved in this case.
According to Ceresney, “Our general practice is not to name entities or individuals that we do not charge. Therefore, in this case, we determined that it was not appropriate to make public the individuals or entities that may have been involved in the internships.”
