Photographer: Simon Dawson/Bloomberg

Ex-JPMorgan Executive’s Identity-Crisis Case Makes Top Court

  • Regulator appealed Achilles Macris case in U.K. Supreme Court
  • Case will set bar on how FCA identifies traders in settlements

A years-long battle between a U.K. regulator and the banking industry over the identification of traders in sanction notices came to a head in London’s top court Thursday, in a crucial hearing for the future of the agency’s enforcement cases.

The Financial Conduct Authority asked the Supreme Court to overturn a ruling that it failed to properly hide the identity of Achilles Macris, the former JPMorgan Chase & Co. manager of the so-called London Whale trader, in a settlement with the bank three years ago. If the Macris ruling is upheld, the FCA may have to overhaul how it presents all its reports.

For years the FCA has used monikers such as “Trader A” in settlement notices with firms to get around a requirement that a person must be given the chance to respond to allegations if they’re identified. The anonymity allows the agency to illustrate misconduct by publishing real chatroom transcripts that demonstrate the behavior. 

"The person who is prejudiced has to be identified,” Jonathan Crow, a lawyer for the FCA, told the five-judge panel Thursday, arguing that Macris was never identified in any regulatory notices. "If a collective label is used, a person has not been identified."

Traders have fought back over recent years, claiming the FCA doesn’t go far enough in disguising them. Macris’s lawsuit is one of a number the FCA is facing, but the first to reach the U.K.’s top court.

London Whale

In Macris’s case, JPMorgan was fined 138 million pounds ($168 million) in 2013 after a trader nicknamed the London Whale incurred $6.2 billion in losses. The FCA referred throughout the notice to “CIO London management,” which Macris contended easily identified him because he was responsible for JPMorgan’s chief investment office in Europe and was based in London. So far, the U.K. courts have agreed with him.

"If you use generic phrases like management and senior management and you have to find out from outside the notice what the management structure was, then the notice is not doing the identifying," Crow said.

Lawyers for Macris said that he was clearly identified in the notice and that he should’ve been allowed to respond to the FCA’s findings before they were published in the JPMorgan settlement documents.

Other traders suing the FCA over the issue include ex-Deutsche Bank AG trader Christian Bittar, who claims he was identifiable in the German lender’s Libor settlement last year, and Julien Grout, another former JPMorgan trader involved in the London Whale case.

The issue isn’t necessarily identification, but that regulators settle with banks before dealing with individuals making it difficult to defend their actions, according to Harvey Knight, a London lawyer who isn’t involved in the lawsuit.

"The real concern is not third-party rights, but the regulators’ practice of investigating and settling with the institutions before dealing with any individuals caught up in the case," said Knight, a partner at Withers. "Consequently individuals have to contend with a case that their former employer has already settled with their regulators and the die is cast before these individuals are given any right of reply."

Macris oversaw JPMorgan’s Chief Investment Office in Europe where trader Bruno Iksil made market-distorting bets on derivatives. Iksil’s bad bets led to more than $900 million in penalties from regulators including the U.S. Securities and Exchange Commission and the FCA.

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