The Upper Tribunal has upheld the FCA's decision to ban Jes Staley, former CEO of Barclays, from holding senior management roles in the financial services industry.
Mr Staley approved a letter sent to the FCA that contained misleading statements about the nature of his relationship with Jeffrey Epstein and their last point of contact.
The letter claimed that Mr Staley did not have a close relationship with Mr Epstein. However, in reality, in emails between the two, Mr Staley described Mr Epstein as one of his 'deepest' and 'most cherished' friends.
The letter from Barclays to the FCA also claimed Mr Staley ceased contact with Mr Epstein well before he joined Barclays. However, Mr Staley was actually in contact with Mr Epstein in the days leading up to his appointment as CEO being announced on 28 October 2015. Mr Staley joined Barclays in December 2015.
The FCA relied on hundreds of emails which were key to its FCA's investigation and showed that the two had a close relationship over many years. They were also in contact much later than Mr Staley claimed in his letter. The letters showed Mr Staley was in contact indirectly with Mr Epstein in 2016 and 2017.
The FCA alleged that Mr Staley acted recklessly when he signed off the letter and the Tribunal agreed. It made the point that Mr Staley had been investigated before, so it would have expected him to be especially careful about the wording of the letter.
The Tribunal found that Mr Staley had a clear motive for downplaying the relationship and that, at the time he described his relationship with Epstein to Barclays, he had no reason to believe the full position about it would emerge through the emails obtained by the FCA. The Tribunal also found that some of Mr Staley's evidence lacked credibility, and that he has shown no remorse for his conduct.
Mr Staley was found to have acted with a lack of integrity, to have failed to be open and co-operative and to have failed to make appropriate disclosures to the FCA.
The FCA proposed to fine Mr Staley £1.8 million. The Tribunal reduced this fine to £1.1 million as, after the FCA issued its Decision Notice, Barclays decided not to permit Mr Staley to receive deferred shares to which he could have been entitled.
The case shows that non-disclosure will get you every time, even if the underlying misbehaviour would currently not. However, in the future, it may do so, depending on how the rules on non-financial misconduct develop. For the moment, the Tribunal has confirmed that integrity, being open and cooperative with the FCA at all times, and demonstrating good judgement are fundamental requirements of senior managers.
Key takeaways from this matter for firms and regulated individuals include:
- The importance of actually understanding the full scope of what is required under the PRA and FCA Conduct Rules and the implications that has for fitness and propriety.
- A reiteration that reckless behaviour is not exculpatory from a finding of lack of integrity.
- Great care should be taken by firms and individuals to ensure that written statements submitted to the regulators are fair and accurate.
- If a regulator makes a verbal request of a regulated firm or individual to provide information, it may be prudent for the firm or individual to make a request that the request be followed up with a written request confirming the extent of the information requested (even if the information is being provided voluntarily). Likewise, if responses are given verbally, then it may be prudent for them to be followed up with written confirmation of the response.
- Caution should be exercised when seeking to make or rely on an overly-legalistic interpretation of regulatory provisions. The Tribunal in this case noted that "the provisions of [the disciplinary procedures] must be applied flexibly according to the circumstances of the case". However, this is also relevant more generally in relation to regulatory provisions.
- As outlined in the judgment, one of the relevant factors taken into account in relation to whether to make a prohibition order in relation to an individual is whether that person has reflected on their conduct and whether they have shown genuine remorse. This is a frequently recurring theme and individuals who could potentially be subject to such an order would be well-advised to take this into account.
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.
