In the Macris case the Supreme Court clarified the circumstances in which the regulators, when dealing with enforcement notices, need to offer protections to third parties.
The 22 March 2017 3-2 majority decision states that a person is not identifiable in an enforcement notice unless it refers to him by name or job title. It is almost inevitable that regulatory notices will contain criticisms of the firm and senior leaders, not least so other firms can consider their own governance in a new light. However, it is accepted that any individuals identified have protections.
Lord Sumption, delivering the leading judgment, considered that the appeal turned on the meaning of “identifies” in the context of the notice in question. In paragraph 11, he explains:
“a person is identified in a notice under s.393 [Financial Services and Markets Act 2000] if he is identified by name or a synonym for him, such as his office or job title. … it must be apparent from the notice itself that it could apply to only one person and that person must be identifiable from information which is either in the notice or publicly available elsewhere. However, resort to information … elsewhere is permissible only where it enables one to interpret (as opposed to supplementing) the language of the notice.”
Reasons and protections in the decision
There is strong public policy behind regulators wishing to attach accountability to senior individuals within firms. As Lord Sumption indicated, while this looks “like a small point … it has significant ramifications” for FCA investigatory and disciplinary functions.
It is relevant that Macris knew he was under investigation and went on to receive a personal sanction. Where this is not the case, the Supreme Court’s decision really does not give a free rein for regulators to unfairly prejudice individuals. Because of this, we expect the regulators will be more mindful of terminology used in notices in future.
Affected individuals may still have viable protections. This was a majority judgment and, as Lord Wilson says in his dissenting opinion, “The court’s decision … does not strike a fair balance. … Does the point not also have significant implications for individuals wrongly criticised in … notices given by the [FCA] to others?”
The relevant investigations
Following various investigations, the FCA imposed a large financial penalty on Macris’ former employer and this firm was also subject to several large fines in the US. In 2012, at the time of the incidents behind the fines, Macris was the International Chief Investment Officer (“CIO International”) at the firm. He was under investigation personally for his involvement in these incidents and, in February 2016, was subject to an FCA fine of £792,900.
It is also of note that it seems as if several other Upper Tribunal references have been withdrawn since this decision was published (see: Bittar and Martin-Artajo, for example).