The Securities and Exchange Commission (SEC) announced Tuesday that Bank of New York Mellon (BNY Mellon) had agreed to pay $14.8 million dollars to settle Foreign Corrupt Practices Act (FCPA) violations. The agreement arose out of BNY Mellon providing internships to relatives of officials linked to a Middle Eastern Sovereign Wealth Fund.

The settlement, in which BNY Mellon is not required to admit or deny wrongdoing, was one of the first actions brought by the SEC against a financial institution under the FCPA. It is also the first anti-bribery action in which student internships were considered a thing of value for FCPA prosecution.

During 2010-2011, BNY Mellon provided bank asset and wealth management services to a Middle Eastern Sovereign Wealth Fund, a government entity responsible for the management and administration of assets of an unnamed Middle Eastern country. These assets were entrusted to BNY Mellon by the country’s Minister of Finance. At that time, BNY Mellon held assets for the Wealth Fund totaling more than $55 billion.

In February 2010, an official of the Wealth Fund made a personal request that BNY Mellon provide internships to two relatives, his son and nephew. At one point, the official told a BNY Mellon employee that internships represented an “opportunity” for Mellon and that if BNY Mellon could not satisfy the request, he would obtain internships for his family from a competitor. Around the same time, another official with the Wealth Fund made a similar request for his son to be placed as an intern at the London office of BNY Mellon. A trail of emails confirm that managers at BNY Mellon did not feel that they were in a position to reject these requests and that granting the requests was crucial to retain and gain the Wealth Fund’s business.

Internship positions at BNY Mellon were highly competitive and characterized by stringent hiring standards including a minimum grade average, multiple rounds of interviews, relevant prior work history and an emphasis on leadership experience. The three interns hired by BNY Mellon did not meet the basic standards for internships and BNY Mellon hired the interns before even meeting or interviewing them. Further, the six-month internships were significantly longer than the work experiences typically afforded to BNY Mellon interns through its normal summer program. The intern placed in London was unpaid.

The settlement confirms that the interns were less than exemplary employees. Two of the interns were confronted by Human Resource employees concerning repeated absences from work and the third intern was characterized as not hardworking.

The investigation followed a 2011 industry-wide sweep, undertaken as part of a broader foreign bribery probe, in which the SEC sought information about financial institutions business dealings with state owned investment funds. JP Morgan Chase, Citigroup, Credit Suisse Group, and other Wall Street institutions are also under investigation for possible violations. The announcement has sent shockwaves across an industry known for hiring friends and family members of customers.