Sources with direct knowledge of the matter told Reuters that JPMorgan Chase & Co has ceased to work on the initial public offering of a Chinese company as US regulators look into the company's hiring practices in China. This is the second time that a Chinese IPO candidate has been dropped by JPMorgan as US securities authorities continue to investigate if the bank broke federal regulations in hiring relatives of existing or prospective clients with the intention of getting business from them, the report said.

The sources said JPMorgan has stopped talks with Tianhe Chemicals as it was in the process of closing a deal valued at $1 billion. Tianhe Chemicals is a company that supplies refiners like China Petroleum and PetroChina with lubricating oil additives. IFR, a publication by Thomson Reuters, said Tianhe Chemicals had planned to undertake an IPO in the second quarter of 2014.

Sources told IFR that the exit of JPMorgan was prompted by concerns regarding the lender's employment of Tianhe Chemicals Chairman Qi Wei's daughter Joyce Wei. According Hong Kong securities license filings, a certain Jiao Wei was connected at JPMorgan from January 2012 to August 2013. A person told IFR that Jiao Wei is the Chinese name of Joyce Wei and also confirmed that she is the daughter of Chairman Wei. The filings further revealed that Jiao Wei transferred to Swiss bank UBS in October. Another person also said that UBS is tasked to handle the IPO of Tianhe Chemicals, Reuters reported.

JPMorgan has been talking with Tianhe for at least four years for a listing abroad, the report said. They had been in discussions since at least 2011 when an IFR report said the firm was eyeing a London listing.  The report said it remained unclear if Tianhe agreed to a formal letter of engagement before Wei became employed at JPMorgan or after she did.