The Financial Conduct Authority has won its case against one of the bankers involved in the so-called “London Whale” case.
The Supreme Court has ruled that the FCA did not identify Achilles Macris in a decision notice when it fined JP Morgan Chase Bank £137.6m.
The bank’s international chief investment officer complained in 2013 that the FCA identified him in its highly critical assessment involving the ‘London Whale’ trading debacle, without giving him the chance to defend himself.
In his judgement, published today (22 March) Supreme Court justice Lord Sumption ruled that none of the terms used by the FCA as synonym’s for Mr Macris would have identified him to the general public.
He said: “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. Plainly it would not.”
The fine related to 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 (£4.9bn) by the end of 2012 and occurred as a result of what became known as the “London Whale” trades, which were conducted by traders Javier Martin-Artajo and Bruno Iksil, but ultimately overseen by Mr Macris.
Mr Macris filed a claim against the FCA alleging that he could be identified in decision and final notices issued by the City watchdog.
A judge in the Upper Tribunal agreed with this assessment last April, but the regulator appealed, arguing that it had not explicitly named Mr Macris in the publications.
However, Court of Appeals judge Elizabeth Gloster decided to uphold the initial ruling, stating that “the judge was in my judgment clearly right to conclude as he did”.
Supporting Lord Sumption’s ruling, Lord Neuberger, the president of the Supreme Court, said the law prevented the FCA from identifying an individual’s in certain circumstances, but that did not mean they could not be identifiable.
He said: “The fact that Mr Macris could be identified by reference to a publicly available US Senate committee report would not do because a member of the public would not know of that report, and anyway would not think of referring to it for the purpose of identifying Mr Macris as the individual referred to in the notice in this case.”
Commenting on the Supreme Court outcome, Chris Dyke, lawyer at leading criminal and regulatory law firm Corker Binning, said the judgment of the Supreme Court would be a relief for the FCA.
He said: "The overturned Court of Appeal decision exposed the tension between the FCA’s desire to quickly settle regulatory investigations into financial institutions and its public criticism of the employees of those companies necessitated by those settlements.
"The time and resources required to deal with the interventions and representations of a potentially very large pool of individuals would have been a very heavy burden for the FCA and could have significantly slowed the speed of regulatory enforcement."