The former head of Barclays PLC, James (“Jes”) Staley, has been sanctioned by the U.K.’s Financial Conduct Authority (FCA) for misleading the regulator about his relationship with disgraced financier Jeffrey Epstein.
The FCA ruled that Staley should be fined £1.8 million and banned from holding a senior management position in the financial industry. Staley is appealing that ruling to the Upper Tribunal.
In its decision, the FCA said it found that “Staley recklessly approved a letter sent by Barclays to the FCA, which contained two misleading statements, about the nature of his relationship with Jeffrey Epstein and the point of their last contact.”
The regulator said that in August 2019 it asked Barclays to explain what it had done to review the relationship between Staley and Epstein.
The firm provided a response, which relied on information supplied by Staley, claiming that they did not have a close relationship.
“In reality, in emails between the two, Mr. Staley described Mr. Epstein as one of his ‘deepest’ and ‘most cherished’ friends,” the FCA said.
The letter also claimed that Staley had ceased contact with Epstein long before joining Barclays.
“However, Mr. Staley was in fact in contact with Mr. Epstein in the days leading up to his appointment as CEO being announced,” the regulator said.
“While Mr. Staley did not draft the letter, there was no excuse for his failure to correct the misleading statements when he was the only person at Barclays who knew the full extent of his personal relationship with Mr. Epstein and the specific timings of his contact with him,” it said. “The FCA has found that Mr. Staley was aware of the risk that his association with Mr. Epstein posed to his career.”
As a result, the FCA concluded that Staley misled the regulator and acted with a lack of integrity.
“A CEO needs to exercise sound judgment and set an example to staff at their firm. Mr. Staley failed to do this,” said Therese Chambers, joint executive director of enforcement and market oversight with the FCA, in a release.
“We consider that he misled both the FCA and the Barclays board about the nature of his relationship with Mr. Epstein,” she said. “Mr. Staley is an experienced industry professional and held a prominent position within financial services. It is right to prevent him from holding a senior position in the financial services industry if we cannot rely on him to act with integrity by disclosing uncomfortable truths about his close personal relationship with Mr. Epstein.”
The U.K.’s Prudential Regulation Authority issued a statement on the case, saying, “We support the FCA’s decision announced today against Jes Staley. It is imperative that senior managers act with integrity and are open and cooperative with the regulators.”
Barclays’ compensation committee, which had previously suspended Staley’s deferred bonus and other long-term incentives, announced that, following the regulator’s findings, Staley should forfeit £17.8 million in deferred remuneration, including his bonus for 2021 and other unvested awards.