J.P. Morgan Chase & Co. (NYSE: JPM), which already faces a handful of federal investigations for a variety of alleged bad behavior, now faces a U.S. Securities and Exchange Commission (SEC) probe of bribery in China. The New York Times reported over the weekend that the bank is being investigated for hiring the children of powerful Chinese officials, known as “princelings” in China, to help the bank win business in the Middle Kingdom.

Is Chase too big to manage (TBTM)? Can CEO Jamie Dimon and his executive staff keep a grip on the bank’s more than 250,000 employees? What about other big financial institutions?

It has not been a good month for Chase. Last week, the “London Whale” scandal resulted in criminal charges against two of the bank’s former traders, and the SEC is also pushing the bank in a civil action to admit to its wrongdoing in the scandal. Then there is the investigation by the Justice Department into the bank’s sale of mortgage bonds in California just before the financial crisis struck.

This is getting to be kind of a big deal. The bank added $678 million to its litigation reserves in the second quarter and has now set aside $6.8 billion in its reserve fund. Note 23 in the bank’s latest Form 10-Q provides a litany of the bank’s alleged sins and includes some well-known names, such as Bear, Stearns and Enron, as well as Lehman Brothers and Libor.

Chase posted net earnings last year of more than $21 billion, and that includes the $6.2 billion loss in the London Whale debacle. The bank’s litigation costs over the next six months could be as high as $4 billion, according to a report from Reuters.

The probe into the hiring of Chinese princelings is one of six that the bank calls out in its latest quarterly report:

A request from the SEC Division of Enforcement seeking information and documents relating to, among other matters, the Firm’s employment of certain former employees in Hong Kong and its business relationships with certain clients.

Those “certain clients” include China’s largest investment firm, China Everbright, and the country’s state-controlled railroad company. Those “certain former employees” include the son of the chairman China Everbright and the daughter of an official with the Chinese railway.

It is not illegal to hire well-connected employees, of course, but it is illegal to hire them with the expectation that the job will be exchanged for new business. While that is difficult to prove, the SEC has become more active in filing charges like this, and that is not good for institutions that are TBTM.

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