Barclays Staff to Face New York Whistle-Blowing InterviewsBy and
Department of Financial Services ramps up probe after scandal
Initial investigation focuses on processes at the U.K. bank
Senior executives at Barclays Plc will be interviewed by New York’s Department of Financial Services as the U.S. regulator starts its investigation into the whistle-blowing scandal surrounding Jes Staley, according to two people with knowledge of the matter.
The DFS, led by Superintendent Maria Vullo, is probing whether the bank has sufficient safeguards to protect whistle-blowers in light of its chief executive officer’s attempts to identify an anonymous informant, said the people, who asked not to be identified speaking about a confidential process. The executives, based in the U.S. and London, will be questioned in New York by the end of the year about Staley’s actions, the firm’s processes and the underlying incidents that sparked the scandal, the people said.
Officials for Barclays and the DFS declined to comment.
Barclays reprimanded Staley in April after discovering he’d repeatedly tried to unmask a whistle-blower, even after colleagues said it was inappropriate. Some executives and board members have already faced multiple interviews with the Financial Conduct Authority over the past few months and the U.K. regulator is expected to reach a final decision on Staley’s fate in December, people have said. The CEO may have to step down if the FCA deems him unfit to lead a financial institution.
At this stage, the New York DFS’s investigation is focused on the bank’s whistle-blowing procedures and is not directly examining Staley’s personal conduct, said the people. In the U.S., whistle-blowers are protected by federal law under the Dodd-Frank Act and are entitled to a reward if they provide “key original information” that leads to a successful enforcement action.
The controversy dates back to June 2016, when Barclays’s board received an anonymous letter raising concerns about Staley hiring one of his former JPMorgan Chase & Co. colleagues, Tim Main. The letters flagged issues of a personal nature about him and Staley’s role in dealing with those concerns at JPMorgan.
Joe McGrath, Barclays’s New York-based global head of banking and CEO of the Americas, also received a second similar letter, Bloomberg News has reported. Chairman John McFarlane has said Barclays believes with “high confidence” that the anonymous letter came from outside the bank in the U.S., not from an employee.
In April, Barclays said it had commissioned an independent review of its relevant processes and controls and tightened the way it manages letters from informants that come from outside the firm’s official “speak up” channels.
The U.K.’s FCA has already interviewed Staley twice, as well as officials including Mike Ashley, the board member who supervises whistle-blowing complaints and Chief Operating Officer Paul Compton, people have said.
While Staley may forfeit his entire 1.3 million-pound ($1.7 million) bonus, the board did not fire the CEO because it deemed he “honestly, but mistakenly, believed” his actions were permitted. Chairman McFarlane has said it wouldn’t have been “just” to fire Staley over the issue, and cited his inexperience in a CEO role as a factor in the board’s thinking.
Barclays’s head of group information security Troels Oerting has taken a leave of absence from which he will probably not return, people familiar with the decision said Thursday. The CEO asked Oerting, who led the group information security team, to track down the author and he sought assistance from the U.S. Postal Inspection Service, the people said. His leave and eventual departure are said to be unconnected with his role in the whistle-blowing affair.
Last week, the U.K. lender plunged the most since the aftermath of the Brexit vote after the investment bank posted the worst trading performance in Staley’s two-year tenure. The stock has declined 17 percent this year.