Bank of New York Mellon has agreed to pay $14.8 million to settle Securities and Exchange Commission allegations that it used its internship program to violate the Foreign Corrupt Practices Act.
The $320 billion-asset New York bank in 2010 and 2011 improperly gave internships to family members of foreign government officials affiliated with a Middle Eastern sovereign fund, the SEC said in a news release Tuesday.
BNY Mellon did not admit or deny any wrongdoing in agreeing to the settlement, the SEC release said.
The agency declined to name the sovereign fund or the foreign government officials implicated, as did a BNY Mellon spokesman when reached by phone for comment.
"We are pleased to reach an agreement with the SEC that allows us to put this matter behind us," the BNY Mellon spokesman, Kevin Heine, wrote in an email.
The SEC alleged that the fund officials asked BNY Mellon to provide internships for family members in exchange for the fund's business.
The corrupt practices act "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," the SEC's director of enforcement, Andrew Ceresney, said in the release. "BNY Mellon deserved significant sanction for providing valuable student internships to family members of foreign officials to influence their actions."
Government officials warned of potential similar actions against banks that operate globally.
"Financial services providers face unique corruption risks when seeking to win business in international markets, and we will continue to scrutinize industries that have not been vigilant about complying with the [act]," Kara Brockmeyer, chief of the SEC enforcement division's foreign-corrupt-practices unit, said in the commission's release.
BNY Mellon "lacked sufficient internal controls," the SEC release said.
"As the SEC noted, we cooperated with the SEC throughout this process," BNY Mellon's Heine wrote in the email, "and had already taken steps to enhance our existing internal controls and procedures with respect to our internship and hiring practices."