On February 9, 2016, the FCA issued JPMorgan’s former head of CIO International, Mr. Achilles Macris, a Final Notice and a fine of £792,000 for failing to be open and co-operative. The FCA found that Mr. Macris was responsible for a number of portfolios, including the Synthetic Credit Portfolio, later known as the “London Whale” trades. The notice states that, between March and April 2012, Mr. Macris failed to inform the FCA’s predecessor, the Financial Services Authority, about concerns related to the SCP even though Mr. Macris was also aware that the firm was subject to a “close and continuous” relationship with the FSA from October 2010, meaning that the firm had been recognized as requiring close monitoring and possibly carrying a high probability of risk. The SCP suffered increasing losses from January 2012, and the FCA found that Mr. Macris, despite having attended a meeting with the FSA in March 2012, failed to update the FSA on the full extent of those difficulties, including, according to the FCA, the SCP having by then made a $200 million loss and having experienced rebalancing problems. The FCA also found that, in April 2012, Mr. Macris, having participated in another meeting with the FSA, failed again to inform the FSA of the continuing difficulties arising out of the SCP. By the end of April 2012, the SCP had recorded a year-to-date loss of over $2 billion. Mr. Macris was found to have failed to meet the standards expected of an Approved Person under the Statement of Principle 4 for Approved Persons. Mr. Macris was also identified in the FCA’s Final Notice to JPMorgan Chase, dated September 19, 2013, in relation to the London Whale case. The Court of Appeal held that Mr. Macris had been prejudicially identified in the Final Notice. The UK Supreme Court has granted the FCA permission to appeal this decision and the case is due to be heard by the Supreme Court later this year.
The Final Notice is available at: http://www.fca.org.uk/static/fca/documents/final-notices/achilles-macris.pdf.
Our client note on the identification of third parties in FCA Notices is available at: http://www.shearman.com/~/media/Files/NewsInsights/Publications/2016/01/Identification-of-Third-Parties-in-FCANotices-FIA-012615.pdf.