The FCA has won a crucial legal victory after the Supreme Court ruled that it had not wrongfully identified a former senior banker at JP Morgan blamed for the American Bank's "London Whale" trading scandal.
Mr Macris, a former London-based manager in JP Morgan's chief investment office, successfully sued the FCA saying that it had been possible to work out his identity within the FCA public decision notice issued alongside the fine against the Bank. He said that it "wrongly and unfairly accused me of deliberately misleading" regulators without offering him a chance to rebut the claims.
The FCA challenged his view in court, but was unsuccessful in its appeal of a court finding in favour of Mr Macris. The FCA then asked the Supreme Court to review the finding and last month it found in favour of the FCA stating that they had gone far enough in hiding his identity. Judge Jonathan Sumption said "The real question is whether the terms of the notice itself would have conveyed to a reasonable member of the public without extrinsic information that any of these terms was a synonym for Mr Macris.... Plainly it would not!"
If the FCA had lost the case, it could have meant that it would have to spend much longer investigating before it was able to make its findings public, as it would have placed a burden on officials to give a right to reply to any employees mentioned anonymously in its work.
This has shifted the balance of power firmly in favour of the FCA as individuals that are criticised, but in a manner that falls short of identification in publicly issued notices, clearly leaves those individuals without the means to challenge serious allegations made against them.
A different stance is taken by the Jersey Financial Services Commission who go to some lengths to ensure that causal factors are traced back not just to process or procedural issues but also to the individuals whose lack of competence or integrity has been a contributory factor. This is evidenced by the balance of public statements that have been issued not just in respect of firms, but also against individuals within those firms.
Jersey is a small jurisdiction and as such its reputation is closely guarded. Where serious issues have been uncovered, the Regulator has shown it will use the weight of its powers to identify and restrict individuals from certain employment or positions. Draconian though these measures might be, the regulatory laws and indeed the Regulator's own Decision Making Process necessitate due process, the right of challenge and response by the individuals affected, ultimately through to the right of appeal to the Royal Court if issued with Directions or a Public Statement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.