Ex-JPMorgan London Whale Manager Loses FCA ‘Identity’ Fight

Updated on
  • Achilles Macris wasn’t identifiable in Whale penalty
  • Surprise ruling may affect court cases involving other traders

The Financial Conduct Authority didn’t identify a former JPMorgan Chase & Co executive in a penalty notice related to the London Whale scandal, the U.K.’s top court ruled, in a surprise departure from previous decisions that marks a big win for the regulator.

In a judgment that will have wide repercussions for several traders in disputes with the FCA, the Supreme Court said Wednesday that the agency did enough to hide the identity of Achilles Macris in a report accompanying a 138 million-pound ($172 million) fine against the bank in 2013. The court said while other bankers might have figured out who he was, the general public could not.

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 chatroom transcripts and events while avoiding any delay in issuing the sanction. In the case of Macris, the FCA used the term "CIO London management."

“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,” Judge Jonathan Sumption said in the ruling. "Plainly it would not."

London Whale Fine

JPMorgan was fined more than $1 billion by U.S. and U.K. regulators in 2013 after a trader nicknamed the London Whale incurred $6.2 billion in losses. The FCA referred in its penalty notice throughout to faults made by “CIO London management,” a label Macris contended easily identified him because he was responsible for JPMorgan’s chief investment office in Europe and was based in London. Two lower courts agreed with him in the three-year battle.

"I am naturally disappointed with the decision," Macris said in an emailed statement from his lawyer.

Macris was fined 792,900 pounds by the FCA last year for failing to tell authorities about concerns he had with the bank’s activities in the “London Whale” case. Macris described the decision at the time as "a major climb-down" by the regulator after it had previously said he deliberately misled authorities.

"Although the Supreme Court has ruled that I was not identified, the reality is that the FCA’s final notice to JPMorgan made findings about my conduct which the FCA had to retract," he said in Wednesday’s statement.

The Supreme Court said a synonym must clearly apply to only one person not multiple individuals for a person to be identified. The moniker "CIO London management" was "not a sufficiently precise expression" to identify Macris, Sumption said in court. The judges ruled by a 4-1 vote in favor of the FCA.

Other Cases

Since Macris, a number of traders have filed similar suits against the regulator, many of which were on hold awaiting the Supreme Court decision. The ruling should go some way to giving the FCA greater protection.

“The FCA is pleased there is now a final ruling on the issue and is considering the impact of the Supreme Court’s judgment on the other third-party references" in other courts, the regulator said in an emailed statement.

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 2015 Libor settlement, and Julien Grout, another former JPMorgan trader involved in the London Whale case.

The Supreme Court ruling was criticized by defense lawyers, who have long contended the FCA too often reaches quick settlements with firms at the expense of individual’s rights.

This "will do little to check the perceived tendency on the part of the regulator and firms to reach swift settlements in which the underlying facts are not subject to rigorous challenge, at the expense of procedural rights for individuals," said Hannah Laming, a lawyer at Peters & Peters in London.

If the FCA had lost at the Supreme Court, it may have led to watered-down settlements scant on details in an effort to avoid litigation. A hint of this was seen in January when Deutsche Bank was fined 163 million pounds for money laundering failures in relation to Russia. The report noticeably lacked detail on individuals’ conduct as the FCA awaited the top court decision.

(Updates with lawyer quote in penultimate paragraph.)
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