Regulation  

FCA unfairly exposed London Whale banker, Tribunal finds

The Upper Tribunal has upheld a complaint made against the Financial Conduct Authority and found that a former JP Morgan Chase banker was unfairly identified in the FCA decision papers involving the ‘London Whale’ trading debacle.

Achilles Macris, a former JP Morgan Chase banker, filed a claim against the FCA alleging that he could be identified in decision and final notices.

The Upper Tribunal agreed, however the FCA is appealing the decision.

The case stems from a decision notice against JP Morgan Chase Bank, published by the FCA on 18 September 2013, whereby the bank was fined £137.6m as a result of trading losses incurred by the bank’s Synthetic Credit Portfolio, a trading portfolio housed within the bank’s chief investment office.

Those losses amounted to $6.2bn by the end of 2012 and to have occurred as a result of what became known as the “London Whale” trades, which were conducted in the SCP.

The decision notice had been preceded by a warning notice and followed by a final notice, both on the same day.

Mr Macris worked as international chief investment officer in the management structure of the SCP.

The Upper Tribunal decision said that by separating out the levels of management, it is “clear that CIO London management, is Mr Macris alone, in other words this process has ‘singled out’ an individual and references to CIO London management can only be understood, given the description of that term in the final notice, as a reference to Mr Macris.

The decision said: “I therefore conclude that the individual identified in the final notice as CIO London management cannot be anyone other than Mr Macris and the preliminary issue is decided in his favour.”

A FCA statement said: “On 14 October 2013 Mr Macris made a reference to the Upper Tribunal asserting that the FCA should have given him the right to make representations on certain matters set out in the final notice issued to JP Morgan Chase Bank N.A on 19 September 2013 which related to the ‘London Whale’ trades.

“Such rights are known as ‘third party rights’.

“The FCA did not give Mr Macris third party rights because it did not consider that he was identified in the notice. However, following a preliminary hearing on an issue of law, the Tribunal released a decision to the parties on 10 April 2014 finding that Mr Macris is identified in the notice and therefore should have been afforded third party rights.

“The FCA is seeking permission to appeal the decision.”