Decision Notice
On , the Financial Conduct Authority issued a Decision Notice to Mr James Edward Staley
DECISION NOTICE
1.
ACTION
1.1.
For the reasons given in this Notice, the Authority has decided to:
James Staley has referred this Decision Notice to the
Upper Tribunal to determine: (a) in relation to the
FCA’s decision to impose a financial penalty, what (if
any) is the appropriate action for the FCA to take,
and remit the matter to the FCA with such directions
as the Tribunal considers appropriate; and (b) in
relation to the prohibition order, whether to dismiss
the reference or remit it to the FCA with a direction
to reconsider and reach a decision in accordance
with the findings of the Tribunal.
Therefore, the findings outlined in this Decision
Notice reflect the FCA’s belief as to what occurred
and how it considers the behaviour of James Staley
should be characterised. The proposed action
outlined in the Decision Notice will have no effect
pending the determination of the case by the
Tribunal. The Tribunal’s decision will be made public
on its website.
(1)
impose on Mr James Edward Staley a financial penalty of £1,812,800
pursuant to section 66 of the Act; and
(2)
make an order prohibiting Mr Staley from performing any senior
management or significant influence function in relation to any regulated
activity carried on by an authorised person, exempt person or exempt
professional firm pursuant to section 56 of the Act.
2.
SUMMARY OF REASONS
2.1.
Mr Staley was appointed CEO of Barclays on 1 December 2015. Mr Staley was
approved by the Authority and the PRA to perform the Senior Management Function
1 (Chief Executive) at Barclays from 7 March 2016 to 31 October 2021, the date
on which he left Barclays. The CEO has a crucial role in providing an example to all
staff at their firm. The CEO also needs to demonstrate sound judgement when
performing their role.
2.2.
As CEO of Barclays, Mr Staley was required to comply with the Code of Conduct,
including by acting with integrity (ICR 1), being open and cooperative with the
Authority, the PRA and other regulators (ICR 3) and by disclosing appropriately any
information of which the Authority or the PRA would reasonably expect notice
(SMCR 4).
2.3.
Mr Staley recklessly approved a letter sent by Barclays to the Authority on 8
October 2019 which contained two misleading statements, about the nature of his
relationship with Jeffrey Epstein and the point of their last contact. In doing so, Mr
Staley failed to comply with ICR 1, ICR 3 and SMCR 4.
2.4.
In 2008, Mr Epstein was convicted of procuring a minor for prostitution by a Florida
state court. Mr Epstein was sentenced to 18 months in prison for this offence. Mr
Staley was aware of this conviction at that time. Mr Epstein was arrested again in
July 2019 on federal charges relating to, among other things, the sex trafficking of
minors. The Authority makes no findings that Mr Staley saw, or was aware of, any
of Mr Epstein’s alleged crimes.
2.5.
On 15 August 2019, the Authority asked Barclays, in a telephone call between a
senior executive at the Authority and a member of Barclays’ board of directors, to
explain in writing what it had done to satisfy itself that there was no impropriety
with respect to the relationship between Mr Staley and Mr Epstein.
2.6.
On 8 October 2019, Barclays sent the Letter to the Authority. The first paragraph
of the Letter stated:
“I am writing to close the loop on your request for assurance that we have
informed ourselves and are comfortable in regard to any association of [Mr Staley]
or Barclays with [Mr Epstein]. I can now report that [Board Member B], [Senior
Executive A] and [Board Member A] have had separate conversations with [Mr
Staley] where he has described his interactions with Mr Epstein. [Mr Staley] has
confirmed to us that he did not have a close relationship with Mr Epstein, and he
is resolute that at no time did he see anything that would have suggested or
revealed any aspect of the conduct that has been the subject of recent allegations.
[Mr Staley’s] last contact with Mr Epstein was well before he joined Barclays in
2015.”
2.7.
The Letter was misleading in two respects, each of which was material.
2.8.
First, the Letter stated that “[Mr Staley] has confirmed to us that he did not have
a close relationship with Mr Epstein.” In the Authority’s view this statement was
misleading because it did not fairly and accurately reflect the following facts and
matters, all of which were known to Mr Staley at the time he approved the Letter:
(1)
Mr Staley confided in Mr Epstein on significant matters relating to Mr
Staley’s career. For example, Mr Staley disclosed to Mr Epstein details of
discussions he was having with Barclays that led to Mr Staley’s
appointment as CEO in October 2015. Notably, on 8 October 2015, Mr
Staley disclosed to Mr Epstein the fact of the decision made by the Board
Nominations Committee of Barclays Plc (the BNC) confirming its approval
of Mr Staley’s appointment, which was not in the public domain and which
Mr Staley understood was “very confidential”.
(2)
Between July 2008 and December 2012, Mr Epstein and Mr Staley
exchanged more than 1,100 emails. On several occasions Mr Staley
described the strength of their friendship, including describing Mr Epstein
as one of his “deepest” or “most cherished” friends and stating that he
had few friendships as “profound” as his with Mr Epstein. The emails also
suggest that they spoke often on the telephone, as well as meeting in
person. Mr Staley continued to communicate with Mr Epstein between
January 2013 and October 2015, exchanging almost 600 emails during
that period, including further emails from Mr Staley referring to the
strength of their friendship.
(3)
Mr Staley visited various of Mr Epstein’s properties, including Mr Epstein’s
island in the US Virgin Islands on three separate occasions (with the last
visit taking place in April 2015), in addition to two further visits to a
private marina owned by Mr Epstein nearby his island, and Mr Epstein’s
ranch in New Mexico. Mr Staley also visited Mr Epstein in Palm Beach,
Florida to join a celebratory birthday dinner for Mr Epstein, in addition to
more regular visits to Mr Epstein’s home in New York. The visits to Mr
Epstein’s properties in the US Virgin Islands and New Mexico were for no
obvious business or professional purpose. Mr Staley travelled to Florida
to visit Mr Epstein during his prison sentence whilst he was on work
release in January 2009, because he was a “loyal person” and “just to
show support” to Mr Epstein.
(4)
Mr Epstein provided advice and assistance, over several years, to an
individual connected to Mr Staley in connection with their career. In
August 2015, Mr Staley informed Mr Epstein that this advice had been
“the gift of great friendship”.
2.9.
Mr Staley subsequently informed the Authority that he considered that he and Mr
Epstein had a “professional, fairly close relationship”.
2.10.
In addition, the Letter stated that “[Mr Staley’s] last contact with Mr Epstein was
well before he joined Barclays in 2015”. This statement was incorrect and was also
misleading.
2.11.
Mr Staley and Mr Epstein were in contact via email until 25 October 2015: this was
three days before Mr Staley’s appointment as CEO of Barclays was announced, and
only shortly before 1 December 2015, being the date that Mr Staley formally started
in role. The matters discussed between Mr Staley and Mr Epstein up to and including
25 October 2015, relating to both Mr Staley’s potential appointment as CEO of
Barclays and press enquiries in connection with his likely appointment regarding
his relationship with Mr Epstein, were significant and of importance to Mr Staley.
2.12.
The Letter made clear that Mr Staley was the source of the information that led to
the two statements, and he must have known that neither statement was accurate.
Mr Staley failed to suggest changes to this language or to make corrections, despite
having been asked, by Senior Executive A, to review a draft of the Letter to ensure
that it was “fair and accurate” on 6 October 2019. In an email dated 7 October
2019 to which Mr Staley was copied, Senior Executive A also confirmed to Board
Member A that “[Mr Staley] has reviewed [the Letter] as well and is comfortable
with the language”. No material amendments were made to the wording of the
Letter after Mr Staley’s review.
2.13.
The Authority was entitled to rely on the contents of the Letter as being an accurate
characterisation by Barclays of the nature of the relationship between Mr Staley
and Mr Epstein and it relied on the assurance provided by Barclays and the factual
confirmations attributed to Mr Staley (among other things) in the Letter. The
Authority concluded in light of the Letter that no further enquiries needed to be
made of Barclays or Mr Staley. Had the Letter accurately described the nature of
the relationship between Mr Staley and Mr Epstein, or the point at which the two
last were in contact, the Authority would have been in a position at that stage to
have considered whether it needed to ask further questions of Mr Staley and seek
clarity on the nature and extent of the relationship.
2.14.
Mr Staley did not draft the Letter and earlier draft versions had included more detail
about the nature and extent of Mr Staley’s relationship with Mr Epstein. Mr Staley
described his relationship with Mr Epstein to various members of senior
management at Barclays, including in the context of the Authority’s enquiry. Mr
Staley, and others at Barclays, understood the Authority’s request, which resulted
in the Letter, as being primarily focussed on whether Mr Staley was aware of, or
had witnessed, any of the alleged criminal activities of Mr Epstein during the course
of their apparent relationship.
2.15.
This does not, however, excuse Mr Staley for failing to correct the two misleading
statements in the Letter:
(1)
Mr Staley was the only person who reviewed or discussed the contents of
the Letter prior to it being finalised, who was able to comment on the
accuracy of these two statements from his own personal knowledge.
Those individuals at Barclays with whom Mr Staley discussed the matter
had, as would have been obvious to Mr Staley at the time, no first-hand
knowledge of the facts relating to the nature of the relationship between
Mr Staley and Mr Epstein, nor of the frequency or extent of their contact.
(2)
By stating that “[Mr Staley] has confirmed to us that he did not have a
close relationship with Mr Epstein”, the Letter implied that there was a
distance between Mr Epstein and Mr Staley that did not accurately reflect
the true position.
(3)
No individual at Barclays was aware that Mr Staley and Mr Epstein had
discussed press enquiries regarding their relationship, in connection with
Mr Staley’s likely appointment as CEO of Barclays, up until 25 October
2015, or had any knowledge of the fact that Mr Staley had shared
confidential information with Mr Epstein about negotiations relating to his
impending appointment as CEO in October 2015 (including confidential
decisions taken by the Board Nominations Committee of Barclays and
Barclays plc on 8 October 2015). Mr Staley did not inform anybody at
Barclays of these matters, which were clearly relevant to factual
assertions that were included in the Letter.
2.16.
In fact, Mr Staley consistently did not accurately set out the nature and extent of
his relationship with Mr Epstein to Barclays. In particular:
(1)
In October 2015, in response to the press enquiries relating to Mr Staley’s
likely appointment as CEO, regarding his relationship with Mr Epstein,
Barclays made statements which gave the misleading impression that Mr
7
Staley and Mr Epstein did not have a close relationship, including that
they had not had a discussion about the recruitment process that year
and that they did not have “anything resembling a close personal
association”. The Authority considers that these statements were based
on information provided by Mr Staley and that, in light of his impending
appointment as CEO, Mr Staley had an interest in giving Barclays the
impression of a greater distance between himself and Mr Epstein than
was the case at this time.
(2)
In September 2019, Mr Staley gave a presentation to the governing board
of Academic Institution A, of which he was a member, to address
enquiries about his relationship with Mr Epstein. A set of talking points
(the Talking Points) were prepared to assist Mr Staley in making this
presentation and subsequently provided part of the factual foundation for
the Letter sent by Barclays to the Authority. The Talking Points were
misleading in various aspects, for example, they included the inaccurate
statements “At no time after his conviction in 2008 did I allow [Mr
Epstein] any connection with any aspect of my professional life” and “I
had limited contact with him post his conviction”. The Talking Points were
based on information provided by Mr Staley to Barclays.
2.17.
The Authority has concluded that Mr Staley was aware of the risk which his
association with Mr Epstein posed to his reputation and his career, and that this
knowledge is relevant context to Mr Staley’s failure in 2015, and subsequently in
2019, to set out accurately the nature and extent of his relationship with Mr Epstein
to Barclays, and his failure to correct the two misleading statements in the Letter.
2.18.
The role of CEO requires an individual to exercise sound judgement and set an
example to staff at their firm. Mr Staley disregarded information, that only he could
have known, about his relationship with Mr Epstein and which contradicted the two
misleading statements in the Letter. Mr Staley must have appreciated that the
Authority would rely on the content of the Letter and must have been aware there
was a risk that the Letter would mislead the Authority. Therefore, by approving the
Letter containing the two misleading statements, Mr Staley acted recklessly and
with a lack of integrity in breach of ICR 1.
2.19.
Mr Staley must have realised that the Authority’s request to Barclays for
information about his relationship with Mr Epstein was important to the Authority.
By approving the Letter which contained the two misleading statements, without
informing Barclays that the statements were incorrect, Mr Staley failed to be open
and cooperative with the Authority and failed to disclose appropriately information
of which the Authority would have reasonably expected notice. Consequently, Mr
Staley failed to comply with ICR 3 and SMCR 4.
2.20.
These breaches represented a very serious failure of judgement by Mr Staley and
involved a failure to act with integrity. Integrity, being open and cooperative with
the Authority at all times, and demonstrating good judgement are fundamental
requirements of senior managers, particularly a CEO of one of the UK’s most
significant financial institutions. The Authority expected Mr Staley, as CEO of
Barclays, to recognise the importance of acting with integrity in all of his
professional dealings and to recognise the importance of being open and
cooperative with the Authority at all times. A necessary feature of the effective
supervision of firms in the UK is for their senior managers to be open and frank in
their dealings with the Authority, the PRA and other regulators, particularly where
those interactions relate to sensitive or important matters.
2.21.
The Authority has also taken into account that Mr Staley was subject to regulatory
action by the Authority and the PRA in 2018, albeit relating to matters not
connected to the findings in this Notice. As a consequence of that action, the
Authority would have expected Mr Staley to have been particularly careful to ensure
that the Letter was factually accurate.
2.22.
The Authority therefore has decided to impose on Mr Staley a financial penalty of
£1,812,800 pursuant to section 66 of the Act for breaching ICR 1, ICR 3 and SMCR
4.
2.23.
Given the nature of the failings described in this Notice, it appears to the Authority
that Mr Staley is not a fit and proper person to perform the role of a CEO or any
other senior management function at an authorised person, exempt person or
exempt professional firm.
2.24.
The Authority therefore has also decided to make an order prohibiting Mr Staley
from performing any senior management or significant influence function in relation
to any regulated activity carried on by an authorised person, exempt person or
exempt professional firm pursuant to section 56 of the Act.
2.25.
This Notice refers to certain individuals and firms, in addition to Mr Staley. By
referring to these individuals and firms, the Authority does not seek to criticise their
actions, and does so only to provide relevant factual context to the findings in this
Notice.
3.
DEFINITIONS
3.1.
The definitions below are used in this Notice:
“Academic Institution A” means an academic institution that Mr Staley was on the
governing body of as at the date of the Letter;
The “Act” means the Financial Services and Markets Act 2000;
The “Authority” means the Financial Conduct Authority;
“Barclays” means Barclays Bank Plc, the entity authorised by the PRA and
regulated by the Authority and the PRA (with firm reference number 122702);
“BlueMountain” means BlueMountain Capital LLC;
“BNC” means the Board Nominations Committee of Barclays and Barclays Plc,
which oversaw the recruitment process for Barclays’ CEO in 2015;
“Board” means the board of directors for Barclays;
“Board Member A” means a member of the Board;
“Board Member B” means a second member of the Board;
“CEO” means Chief Executive Officer;
“Code of Conduct” means the Code of Conduct (COCON) in the Handbook;
“DEPP” means the Authority’s Decision Procedures and Penalties Manual, part of
the Handbook;
“FCA Executive A” means a senior executive at the Authority;
"Firm A” means the firm at which Mr Staley was a non-executive director from
May 2015 until 28 October 2015;
“Handbook” means the Authority’s Handbook of Rules and Guidance;
“ICR 1” means Individual Conduct Rule 1;
“ICR 2” means Individual Conduct Rule 2;
“ICR 3” means Individual Conduct Rule 3;
“JPM” means JP Morgan Chase;
“Law Firm A” means a law firm engaged by Barclays in connection with an
approach to Barclays by Newspaper A;
The “Letter” means the letter from Board Member A to the Authority dated 8
October 2019;
“Newspaper A” means a national newspaper;
“PRA” means the Prudential Regulation Authority;
“RDC” means the Regulatory Decisions Committee of the Authority (see further
under Procedural Matters below);
“Senior Executive A” means a senior executive at Barclays;
“Senior Executive B” means a second senior executive at Barclays;
“Senior Executive C” means a third senior executive at Barclays;
“SMCR 4” means Senior Manager Conduct Rule 4;
The “Tribunal” means the Upper Tribunal (Tax and Chancery Chamber);
The “Talking Points” means the document titled ‘[Academic Institution A] Talking
Points; Draft 11.09.19’, a set of talking points prepared to assist Mr Staley when
providing a description of his relationship with Mr Epstein to Academic Institution
A on 13 September 2019; and
The “Warning Notice” means the warning notice given to Mr Staley dated 3
November 2022.
4.
FACTS AND MATTERS
The role and expectations of the CEO
4.1.
The CEO is the most senior executive director on a board of directors. The CEO
therefore has a crucial role in providing an example to all staff at their firm. The
CEO must at all times act with integrity and be open and cooperative with the
Authority, the PRA and other regulators. The CEO is also required to disclose
appropriately any information of which the Authority or the PRA would reasonably
expect notice.
4.2.
The Code of Conduct requires those who are subject to it to meet certain standards
in discharging their roles and functions under the regulatory system, with high
standards expected of senior personnel. It is particularly important that a CEO
should act with integrity and demonstrate sound judgement, including when
considering disclosure of information to the Authority or the PRA, and set an
example to others of the importance of being open and cooperative with the
Authority, the PRA and other regulators.
4.3.
Mr Staley was appointed CEO of Barclays on 1 December 2015. From 1 December
2015 to 6 March 2016, Mr Staley was approved by the PRA with consent from the
Authority to perform Controlled Function 1 (Director), Controlled Function 3 (Chief
Executive) and Controlled Function 29 (Significant management) for Barclays. Mr
Staley was approved by the Authority and the PRA to perform Senior Management
Function 1 (Chief Executive) for Barclays from 7 March 2016 to 31 October 2021,
the date on which he left Barclays.
4.4.
On 11 May 2018, Mr Staley was subject to disciplinary action by the Authority and
the PRA for breaching ICR 2 in the way he acted in response to an anonymous
letter that Barclays received which raised concerns about its hiring process. This
resulted in a total financial penalty of £642,400 being imposed on Mr Staley, split
equally between two separate Final Notices issued by the Authority and the PRA.
4.5.
In 2008, Mr Epstein was convicted in the USA of procuring a minor for prostitution
by a Florida state court. Mr Epstein was sentenced to 18 months in prison for this
offence. Mr Staley was aware of this conviction at that time. Mr Epstein was
arrested again in July 2019 on federal charges relating to, among other things, the
sex trafficking of minors. On 10 August 2019, Mr Epstein died whilst in prison. The
Authority makes no findings that Mr Staley saw, or was aware of, any of Mr
Epstein’s alleged crimes.
The Letter
4.6.
On 15 August 2019, following a number of press reports, the Authority asked
Barclays, in a telephone call between FCA Executive A and Board Member A, to
explain in writing what it had done to satisfy itself that there was no impropriety
with respect to the relationship between Mr Staley and Mr Epstein.
4.7.
On 8 October 2019, Barclays sent the Letter to the Authority. The Letter included
the following statements:
“[Mr Staley] has confirmed to us that he did not have a close relationship with Mr
Epstein” and “[Mr Staley’s] last contact with Mr Epstein was well before he joined
Barclays in 2015.”
Mr Staley’s relationship with Mr Epstein (1999 to July 2015)
4.8.
Mr Staley’s relationship with Mr Epstein began in 1999 or 2000, at a time when Mr
Staley was the Head of JPM’s Private Bank and Mr Epstein was a client of JPM’s
Private Bank. Their relationship continued when Mr Staley left JPM and joined
BlueMountain in 2013. The evidence relating to the nature and extent of their
relationship between 1999 and July 2015 is set out at Annex B.
Mr Staley’s relationship with Mr Epstein (July 2015 to October 2015)
Mr Staley’s recruitment and appointment as CEO of Barclays
4.9.
Between July 2015 and October 2015, Mr Staley and Mr Epstein discussed the
approach by Barclays to Mr Staley in connection with his eventual appointment as
CEO. Email correspondence between Mr Staley and Mr Epstein from this time
suggests that Mr Staley and Mr Epstein also spoke over the phone about this
matter.
4.10.
The recruitment of Mr Staley in 2015 was managed by the BNC. On 11 July 2015,
Mr Staley informed Mr Epstein in an email titled “B” that, “A member of the board
just reached out.” Later on the same day, Mr Staley forwarded to Mr Epstein an
email he had received from a member of the BNC, commenting “Here we go”.
Following this email, there were further emails between Mr Staley and Mr Epstein
about the matter:
(1)
On 11 July 2015, Mr Epstein asked Mr Staley whether he had been
provided with further information from a recruiter. Mr Staley then sent
an email to Mr Epstein that briefly summarised discussions Mr Staley had
had with another recruiter about what Barclays had told that recruiter as
to its expectations for the recruitment process.
(2)
On 20 July 2015, in an email titled “B”, Mr Staley informed Mr Epstein
that a senior member of the Board wanted to meet him (Mr Staley). Mr
Epstein and Mr Staley then appear to have spoken on the following day.
(3)
At a meeting on 23 July 2015, the BNC agreed to appoint an executive
search firm to undertake the search for a new CEO and reviewed the role
requirements for the new CEO. Mr Staley appears to have been aware of
this, and informed Mr Epstein of it on the same day, noting that “It
begins”.
(4)
On 24 July 2015, Mr Epstein informed Mr Staley by email that, “better if
you not email me. phone only”. Subsequently, Mr Staley sent blank
emails to Mr Epstein on 21 August 2015 and 4 September 2015 with
respective subject headings “Call my cell” and “Call me”.
4.11.
At a meeting on 5 August 2015, the BNC reviewed a list of candidates and identified
four primary prospective candidates, one of which was Mr Staley. The BNC agreed
that contact would be made with the candidates and interviews arranged.
4.12.
At a meeting on 11 September 2015, the BNC discussed the CEO candidates and
agreed to progress discussions with Mr Staley.
4.13.
There was no written agreement between Barclays and Mr Staley which set out that
the negotiations relating to his potential appointment ought to remain confidential.
However, it is apparent from an email that he sent to a senior member of the Board
on 18 September 2015, regarding a conversation he had had with a board member
of Firm A about this matter, that Mr Staley understood that he needed to keep
discussions relating to his potential appointment “very confidential”. Mr Staley
informed the Authority in interview that, in his view, this did not preclude him from
“seeking counsel” from a “couple of people” about the discussions with Barclays.
4.14.
On 4 October 2015, Mr Staley wrote to Mr Epstein, in an email titled “Friendship”,
stating: “You never wavered in our friendship these last three years. That means a
lot too [sic] me. […] Cross your toes!!!”.
4.15.
At a meeting on 8 October 2015, the BNC discussed Mr Staley as a candidate and
unanimously resolved to recommend his appointment as CEO to the board of
directors of Barclays Plc for approval. At a meeting on 8 October 2015, the Board
Remuneration Committee of Barclays Plc approved the proposed compensation
arrangements for Mr Staley.
4.16.
On 8 October 2015, Mr Staley sent an email to Mr Epstein relaying that the BNC
had approved his appointment:
“Nominating com approved. Friday, full board votes. I should have the contract
by the weekend. We’re very close.”
4.17.
Mr Staley informed the Authority that Mr Epstein did not have a “formal or informal
advisory role” in relation to the appointment, and that he was discussing this with
Mr Epstein on the basis that he had previously discussed with Mr Epstein matters
relating to his career and wanted to hear Mr Epstein’s “thoughts” on the matter and
because he “trusted him to be discreet”. Mr Staley’s discussions with Mr Epstein
relating to his potential appointment as CEO reflect the fact that, at the time, Mr
Staley felt able to confide in Mr Epstein in relation to this very significant matter
regarding his career.
4.18.
On 9 October 2015, the Board and the board of directors of Barclays Plc met and
approved, in principle, the appointment of Mr Staley as CEO subject to regulatory
approval and final confirmation of the appointment by the Chairman.
4.19.
On 10 October 2015, Mr Staley informed Barclays that BlueMountain may contact
Barclays “regarding restricting [BlueMountain] from trading in Barclays”, owing to
the knowledge that BlueMountain may have (given that Mr Staley was Managing
Partner of BlueMountain) of Mr Staley’s impending appointment as CEO of Barclays.
4.20.
Mr Staley’s likely appointment as CEO was first reported in the Financial Times on
12 October 2015, prior to the formal announcement by Barclays, and there was
extensive press coverage of Mr Staley’s likely appointment on 13 and 14 October
2015. Mr Staley noted this in an email to Mr Epstein dated 15 October 2015, which
stated: “The press is all over me. Trying to lie low. Sorry.” Mr Staley’s appointment
was subsequently announced by Barclays on 28 October 2015.
Press enquiries at the time of Mr Staley’s appointment – October / November 2015
Newspaper A’s article dated 25 October 2015
4.21.
Following press speculation about Mr Staley’s impending appointment as CEO of
Barclays, Mr Staley, Barclays and Mr Epstein were each approached by Newspaper
A about an article, which was ultimately published on 25 October 2015. Barclays
appears to have been first contacted about the potential article on 24 October 2015.
4.22.
Mr Staley and Mr Epstein discussed this approach from Newspaper A between 16
October 2015 and 25 October 2015:
(1)
On 16 October 2015, Mr Epstein forwarded to Mr Staley an email he
received from a journalist at Newspaper A, who wanted to talk to Mr
Epstein in connection with Mr Staley’s likely appointment as CEO of
Barclays.
(2)
On 17 October 2015, Mr Epstein and Mr Staley exchanged emails about
a previous meeting at Mr Epstein’s home in New York, and during this
exchange, Mr Staley emailed Mr Epstein to note “Don’t worry. We will be
fine.”
(3)
Later that day, Mr Epstein wrote to Mr Staley stating, “I’m on the plane
land in two hours”. Mr Staley responded, “Ok. I’m going to play is [sic]
simple. I’ve known you as a client. I will tell B tomorrow. […] Let me know
if they say something else. But stay away from them. I’m fine.” Mr Staley
informed the Authority that this email reflected what he was planning to
say to Newspaper A if asked, rather than what he was planning to say to
Barclays. Mr Staley also suggested that it was possible that the reference
to “B” might be to BlueMountain, rather than to Barclays.
(4)
Later on 17 October 2015, Mr Staley emailed Mr Epstein to ask “Anything
new?”, to which Mr Epstein responded “no, zero. […]”.
(5)
On 22 October 2015, Mr Epstein forwarded on an email to Mr Staley
showing that the journalist from Newspaper A had called him again. Mr
Epstein forwarded on another email from the journalist to Mr Staley on
24 October 2015.
4.23.
On 24 October 2015, the journalist from Newspaper A contacted Barclays in relation
to the article, explaining that it would contain allegations that Mr Epstein sought to
influence the selection of Mr Staley as CEO of Barclays, both during the process
that had taken place in 2015, and also during an earlier process in 2012. The
Authority has not seen evidence to suggest that Mr Epstein did, in fact, seek to
influence either appointment process.
4.24.
On 24 October 2015, Barclays engaged Law Firm A in connection with the matter,
and Law Firm A, acting for Barclays, wrote a letter to Newspaper A that day. Senior
Executive B was responsible for coordinating Barclays’ response to the proposed
article. On 24 October 2015, Senior Executive B spoke to Mr Staley and asked him
about his relationship with Mr Epstein. Mr Staley informed Senior Executive B that
he knew Mr Epstein and that they had a professional relationship that had arisen
due to Mr Epstein being a client of JPM’s Private Bank when Mr Staley worked at
JPM. In relation to the allegations raised by Newspaper A, Mr Staley informed
Senior Executive B that he may have spoken with Mr Epstein about the earlier
recruitment process in 2012. Senior Executive B informed the Authority that they
recalled, however, that Mr Staley informed them that he had had no discussions
with Mr Epstein about the recruitment process in 2015.
4.25.
On 24 October 2015, a member of staff at Barclays informed Law Firm A that “given
we’re likely to end up with an article even if it focuses on 2012, your letter should
major on quashing the notion that the two are close…and certainly for 2015 that
there has been no collaboration…”. This instruction was brought to Mr Staley’s
attention. Senior Executive B told Mr Staley that they needed to keep the article
“historical and flimsy” and asked Mr Staley if he was comfortable with a statement
being provided to Newspaper A that, “At no time has Mr Staley asked Mr Epstein to
make representations on his behalf regarding his role.” Mr Staley confirmed he was
content with Barclays making that statement.
4.26.
Mr Staley was provided with a draft of the letter to be sent from Law Firm A to
Newspaper A on 24 October 2015. The draft letter stated, among other things,
that “Mr Staley has informed [Barclays] that he is at best an acquaintance of [Mr
Epstein]. They are certainly not close friends as your allegations might imply …”.
Mr Staley suggested to Senior Executive B that the reference to “he is at best an
acquaintance of [Mr Epstein]” should be removed and that the wording should be
changed to “Mr Staley has informed [Barclays] that while he knows Mr Epstein from
his time at [JPM], they are certainly not close friends as your allegations might
imply.” However, when Mr Staley was informed by Senior Executive B that Law
Firm A had sent the letter, due to timing pressures prior to publication of the article,
and that the letter retained reference to the fact that Mr Epstein was “at best an
acquaintance” of Mr Staley’s, Mr Staley responded by stating “no worries”. Mr
Staley told the Authority that he had requested the change because he thought the
use of the word “acquaintance” was “too light”.
4.27.
Mr Staley also did not correct an inaccurate statement in the letter that “Further,
Mr Staley confirms that he has had no contact with Mr Epstein nor discussion of
this matter this year”. This statement had not been included in the draft letter
provided to Mr Staley and had subsequently been inserted following an email from
Senior Executive B to Law Firm A stating that the letter needed to say, “There has
been no contact between Jes Staley or [sic] Jeffrey Epstein, or discussion of this
matter this year”. Mr Staley does not appear to have seen this statement, for which
he is stated to be the source, until after the letter was sent, but there is also no
evidence that Mr Staley subsequently clarified the position, despite the statement
being untrue. In interview, Mr Staley said that this statement was not consistent
with his recollection of his conversations with Senior Executive B, disputed
informing Senior Executive B or anyone else at Barclays that he had had no contact
with Mr Epstein in 2015, and said that his focus during his discussions with Senior
Executive B was on confirming that he did not ask Mr Epstein to lobby on his behalf
in 2012 or 2015. Senior Executive B informed the Authority in interview that they
had the impression from their discussions with Mr Staley, that Mr Staley had been
in contact with Mr Epstein in 2015 and that contact had continued until reasonably
recently. However, as mentioned at paragraph 4.24 above, Senior Executive B also
recalled that Mr Staley informed them that he had had no discussions with Mr
Epstein about the recruitment process in 2015.
4.28.
In the circumstances, the Authority concludes that Mr Staley did inform Senior
Executive B on or around 24 October 2015 that he had had no discussions with Mr
Epstein in connection with the recruitment process in 2015. Prior to 24 October
2015, Senior Executive B knew nothing of the relationship between Mr Staley and
Mr Epstein, and information that they provided to Law Firm A in respect of the
relationship on 24 October 2015 was based on information that they had received
from Mr Staley. In addition, Mr Staley must have known that the inclusion of this
sentence in the letter was inaccurate, particularly in view of ongoing
correspondence he was exchanging with Mr Epstein at the time.
4.29.
On 25 October 2015, the article was published. Senior Executive B shared a copy
of the article by email with senior individuals at Barclays and, separately, with Mr
Staley. Mr Staley then forwarded this email, attaching the article, to Mr Epstein.
4.30.
There were subsequent press articles on this matter between 25 October 2015 and
1 November 2015. On 29 October 2015, Law Firm A explained to Barclays, having
considered a more detailed briefing of historical press coverage relating to Mr
Epstein, that Barclays ought to “…be as strong as we possibly can be in dispelling
the friendship myth. If there is any more information that we can deploy to
demonstrate distance between them it would be helpful…”. Prior to an article
published on 1 November 2015 by Newspaper A, the Barclays’ Corporate
Communications team received further queries from the journalist regarding Mr
Staley’s relationship with Mr Epstein, to which Barclays responded, noting that
“neither Barclays nor Mr Staley feel the need to respond to your two questions
given that there is no obligation to distance ourselves from someone with whom
neither party has anything resembling a close personal association.” Mr Staley was
not copied into this email and there is no evidence that he saw or approved the
wording. However, the Authority considers that, insofar as Barclays was purporting
to convey Mr Staley’s position to the journalist, this was based on what Mr Staley
had previously told Senior Executive B.
4.31. The Authority recognises that the communications sent by or on behalf of Barclays
to Newspaper A prior to the publication of the articles on 25 October 2015 and 1
November 2015 were in the context of a response from Barclays and Mr Staley to
a journalist. However, in the Authority’s view these communications show that Mr
Staley did not accurately convey the nature of his relationship with Mr Epstein to
Barclays. Mr Staley had informed Mr Epstein three weeks before that he had “never
wavered in our friendship these last three years. That means a lot too [sic] me.
[…]” (to which Mr Epstein responded “more than 10 years”) and had communicated
to Mr Epstein details of confidential decisions made by the BNC relating to Mr
Staley’s appointment (see paragraph 4.17). The Authority considers that, in light
of his impending appointment as CEO, Mr Staley had an interest in giving Barclays
the impression of a greater distance between himself and Mr Epstein than was the
case at this time.
4.32.
Mr Staley explained to the Authority that, around the time of the article in
Newspaper A, Senior Executive B had advised Mr Staley that he should not have
any contact with Mr Epstein going forward. Senior Executive B also recalled giving
this advice to Mr Staley. So far as the Authority is aware, Mr Staley had no further
contact with Mr Epstein after 25 October 2015.
Developments following Mr Epstein’s arrest – from July 2019
6 July 2019 to 8 October 2019 – media reports
4.33.
Mr Epstein was arrested on 6 July 2019. From around 17 July 2019, Barclays
received a number of press enquiries requesting comment on articles that included
reference to Mr Staley’s apparent relationship with Mr Epstein. From this point, Mr
Staley was involved in discussions with several individuals at Barclays, including
Board Member A, Senior Executive A and Senior Executive B, in relation to Barclays’
response to these press articles.
4.34.
The press articles that were then published from around 22 July 2019 until 8
October 2019 relating to Mr Staley’s relationship with Mr Epstein included details
of (among other things):
(1)
Mr Staley’s visit in January 2009 to Mr Epstein whilst Mr Epstein was on
work release during his prison sentence (see paragraph 1.18 of Annex
B);
(2)
A large transaction that Mr Epstein was alleged to have introduced to JPM
(via Mr Staley) (see paragraph 1.3 of Annex B); and
(3)
Mr Staley’s visit to Mr Epstein’s island in the US Virgin Islands in April
2015 (see paragraph 1.33.2 of Annex B).
4.35.
Mr Staley discussed his relationship with Mr Epstein with various individuals at
Barclays, including Board Member A, Senior Executive A, Board Member B and
Senior Executive B. During these discussions, Mr Staley explained that:
(1)
he had been introduced to Mr Epstein whilst in his former role as Head of
the Private Bank at JPM, in around 1999 or 2000;
(2)
he had been on Mr Epstein’s private plane, along with members of his
family, once;
(3)
his contact with Mr Epstein had spanned the time that Mr Epstein was
serving his custodial sentence following his 2008 conviction;
(4)
Mr Epstein had provided advice and assistance to an individual connected
to Mr Staley in relation to an application relating to their career;
(5)
he and Mr Epstein were professionally fairly close, particularly as Mr
Epstein had a propensity to introduce business to JPM, and that, whilst
their relationship was predicated on business, they were on good terms;
(6)
he and Mr Epstein had not had any contact since Mr Staley had joined
Barclays; and
(7)
nothing that Mr Staley saw whilst in Mr Epstein’s company had given him
any indication about the fact that Mr Epstein had been committing the
crimes that were the subject of allegations from July 2019.
August 2019 to September 2019 – Academic Institution A
4.36.
As at the date of the Letter, Mr Staley was on the governing board of Academic
Institution A and actively supported Academic Institution A. In August 2019,
Academic Institution A made enquiries to Mr Staley about his relationship with Mr
Epstein. Mr Staley offered to speak with the governing board of Academic
Institution A to address those and any related enquiries about his relationship with
Mr Epstein. Consequently, on 13 September 2019, Mr Staley made an oral
presentation to the governing board of Academic Institution A.
4.37.
The Talking Points were prepared to assist Mr Staley to make this presentation.
Senior Executive A, Senior Executive B and Senior Executive C each assisted in
preparing the Talking Points and had discussions regarding their content with Mr
Staley, and Board Member A recalled being read the Talking Points or the key
points.
4.38.
The Talking Points included the statements that, “At no time after his conviction in
2008 did I allow [Mr Epstein] any connection with any aspect of my professional
life” and that, “I had limited contact with him post his conviction”. These sentences
were inaccurate, in view of the significant number of interactions between Mr
Epstein and Mr Staley relating to Mr Staley’s career and the firms that he worked
for (as described in Annex B and in paragraphs 4.9 to 4.32 above). The Talking
Points also stated that, “At no time during my tenure at [BlueMountain] did I
conduct any business with [Mr Epstein]”. Although the Authority has not seen any
evidence that Mr Staley did, in fact, conduct any business with Mr Epstein whilst he
was at BlueMountain, given that Mr Staley sought to onboard Mr Epstein as a client
of BlueMountain in February and March 2013 (see paragraphs 1.21 to 1.23 of Annex
B), and in view of the fact that Mr Epstein made certain introductions to possible
business contacts for Mr Staley when Mr Staley was at BlueMountain (see
paragraph 1.24 of Annex B), the Authority considers this statement to be potentially
misleading. The Talking Points also stated that, besides attending roughly one
dinner per year hosted by Mr Epstein after his conviction, most often with multiple
guests, “I have only ever been at a social gathering with him once” and that “I have
visited his island twice”: these statements were also misleading, in view of the
evidence regarding the nature of Mr Staley’s relationship with Mr Epstein as set out
in Annex B.
4.39.
A handwritten note taken by Senior Executive C from the meeting between Mr
Staley and members of the governing body of Academic Institution A suggests that,
in response to a question about why he continued to have a relationship with Mr
Epstein following Mr Epstein’s conviction in 2008, Mr Staley stated that “it was a
personal relationship”, he “didn’t socialise with him” and he “was wary and
cautious”. Again, these latter two statements were not accurate.
The Authority’s enquiry - 15 August 2019 to 8 October 2019
The Authority’s initial contact
4.40.
On 14 August 2019, the Authority contacted Barclays by telephone seeking to speak
urgently to Board Member A. On 15 August 2019, FCA Executive A had a telephone
call with Board Member A who was on vacation at the time. On 16 August 2019,
FCA Executive A asked their assistant to record the following note of the call: “[…]
[Board Member A] advised that when the press comments had first emerged [Mr
Staley] came to speak with [Board Member A] and stated that there wasn’t any
particular relationship between him and [Mr Epstein]. [Board Member A] advised
[they] felt satisfied by that. [FCA Executive A] advised that the [Authority’s]
perception is that media reports had intensified around their relationship and asked
[Board Member A] to consider these. [FCA Executive A] further asked [Board
Member A] to write to the [Authority] setting out how they had satisfied themselves
there was no impropriety to the relationship.”
4.41.
After his return from vacation, Board Member A informed Mr Staley of the
Authority’s request during a meeting on or around 23 August 2019. Board Member
A discussed the matter with Mr Staley, and informed Mr Staley that he ought to
speak with Senior Executive A to formulate a response to the Authority’s request.
During this conversation, Mr Staley reiterated to Board Member A that he had no
knowledge of Mr Epstein’s alleged criminal activities following his earlier conviction
in 2008, that he had had no contact with Mr Epstein since becoming CEO of Barclays
and that he was not aware of Mr Epstein having any relationship with Barclays.
Process for drafting the letter of response
4.42.
The Talking Points were used as the basis for preparing a draft response to the
Authority. Mr Staley discussed, on several occasions, the information that Barclays
might require in order to prepare a draft response to the Authority with Board
Member A, Senior Executive A, Senior Executive B and Senior Executive C. During
these discussions, different versions of a draft letter, which had been prepared by
Senior Executive A, were discussed, including a longer version containing more
details about Mr Staley’s relationship with Mr Epstein and some of their interactions.
Mr Staley reviewed this longer version of the letter and was content with it, subject
to it being reviewed again by others.
4.43.
This draft version of the letter was in the form of a letter from Mr Staley to Barclays,
with the initial intention that Barclays would then send this letter on to the
Authority. In late September 2019, Barclays and Mr Staley agreed that the letter
to the Authority should be shorter and instead be from Barclays to the Authority
(rather than from Mr Staley).
4.44.
On 2 October 2019, Board Member A asked Board Member B to speak to Mr Staley
about the matter so that another individual at Barclays could consider the steps
that Barclays was taking to respond to the Authority’s request. Board Member A
also asked Board Member B to consider whether the Board should be briefed on the
issue.
4.45.
Board Member B then spoke with Mr Staley about the matter on 4 October 2019.
During this conversation, Mr Staley informed Board Member B that:
(1)
Since being offered the CEO role at Barclays, he had not had contact with
Mr Epstein;
(2)
Mr Epstein had no relationship with Barclays;
(3)
Mr Staley first met Mr Epstein in 1999/2000;
(4)
When they met, they generally met in Mr Epstein’s office;
(5)
Mr Epstein did little of significance with JPM, but did provide an important
introduction to a hedge fund that JPM acquired, and over a 12-month
period helped negotiate the deal;
(6)
Mr Staley visited Mr Epstein in 2008 when Mr Epstein was on work release
from prison;
(7)
Mr Staley would see Mr Epstein every two months, and would have a
dinner once a year with Mr Epstein at his house;
(8)
BlueMountain did no business with Mr Epstein;
(9)
Mr Staley did see Mr Epstein once when Mr Staley had anchored his boat
off Mr Epstein’s island in the US Virgin Islands;
(10)
Mr Staley had never been interviewed by any authorities in connection to
his relationship with Mr Epstein;
(11)
Mr Staley asked himself how he could have missed what had since
emerged about Mr Epstein’s conduct, but noted that others who
networked with Mr Epstein missed it too, and concluded that Mr Epstein
led two completely distinct lives;
(12)
Mr Epstein’s stature came from his significant network of connections;
and
(13)
There were no pertinent facts about Mr Staley’s relationship with Mr
Epstein that were not in the public domain, other than the fact that Mr
Staley once flew on Mr Epstein’s private plane with members of his family.
4.46.
Board Member B then informed Board Member A that there appeared to have been
no relationship between Barclays and Mr Epstein and nothing from Mr Staley’s
explanation to suggest that this was something that ought to be escalated to the
Board.
4 October 2019 telephone call
4.47.
On 4 October 2019, Board Member A had a telephone call with FCA Executive A
and read the content of the shorter version of the draft letter to FCA Executive A.
Prior to this call, the draft letter included language referring to the meetings
between Mr Epstein and Mr Staley since Mr Epstein’s release from prison in 2009
as being “occasional”.
4.48.
During this call, Board Member A understood that the Authority was most
concerned to understand whether Mr Staley could have been involved in, or
otherwise aware of, Mr Epstein’s alleged criminal conduct. Board Member A then
spoke with Senior Executive A and, separately, with Mr Staley about their
conversation with FCA Executive A. Senior Executive A informed the Authority in
interview that Board Member A had told them that FCA Executive A had raised the
question of whether or not Mr Staley had a close relationship with Mr Epstein.
4.49.
As a consequence of this call, further changes were made to the draft letter to the
Authority, including removing the reference to the “occasional” nature of Mr Staley
and Mr Epstein’s meetings, and introducing a statement that Mr Staley had
confirmed that he did not have a “close relationship” with Mr Epstein. On 5 October
2019, Board Member A suggested to Senior Executive A that, with respect to the
aspect of the Letter that addressed the recency of Mr Staley’s last contact with Mr
Epstein, the draft could state that their last contact was “a long time before” Mr
Staley joined Barclays; in response, Senior Executive A suggested that, based on
his understanding of their last meeting, the Letter should state that their last
contact was “well before” Mr Staley joined Barclays.
4.50.
Senior Executive A made these changes and shared a draft version of the Letter
with Board Member A. On 6 October 2019, Senior Executive A asked Mr Staley to
review the draft letter, stating:
“Jes, Please have a look at the attached draft letter. It is only slightly revised from
the draft I showed you last week, but we want to be sure you feel that the
language is fair and accurate. Based on a discussion between [Board Member A]
and [the Authority] on Friday, we think it will meet the [Authority’s] needs. If you
have any questions or suggested edits please let us know…”
4.51.
Mr Staley questioned the change in wording to include “close relationship” and
discussed with Senior Executive A whether it was accurately expressed. He did not
question the statement that his and Mr Epstein’s last contact was “well before” he
joined Barclays. Senior Executive A informed Mr Staley that, based on what Mr
Staley had told them about his relationship with Mr Epstein to that point, they
considered that the letter as drafted was fair, but that Mr Staley would also need
to satisfy himself of this. Mr Staley confirmed that he had reviewed the letter and
was comfortable with it.
The Letter
4.52.
On 8 October 2019, Barclays sent the Letter to the Authority. The Letter stated:
“I am writing to close the loop on your request for assurance that we have
informed ourselves and are comfortable in regard to any association of [Mr Staley]
or Barclays with [Mr Epstein]. I can now report that [Board Member B], [Senior
Executive A] and [Board Member A] have had separate conversations with [Mr
Staley] where he has described his interactions with Mr Epstein. [Mr Staley] has
confirmed to us that he did not have a close relationship with Mr Epstein, and he
is resolute that at no time did he see anything that would have suggested or
revealed any aspect of the conduct that has been the subject of recent allegations.
[Mr Staley’s] last contact with Mr Epstein was well before he joined Barclays in
2015.
Separately, Barclays’ Financial Crime team has conducted a thorough review of
our records, which did not reveal any client or customer relationship with Mr
Epstein.
In sum, neither our discussions with [Mr Staley] nor our review of the bank’s
records have revealed any cause to suspect that Barclays or [Mr Staley] have
played any role in the activities of Mr Epstein that have been under investigation.
I trust this addresses your questions.”
4.53.
The wording of the Letter was identical to the 6 October 2019 draft version reviewed
by Mr Staley, except for a minor change to the end of the third paragraph which
had previously referred to activities of Mr Epstein that “are under investigation”.
The statement regarding the nature of Mr Staley’s relationship with Mr Epstein
4.54.
The Letter stated that “[Mr Staley] has confirmed to us that he did not have a close
relationship with Mr Epstein”.
4.55.
Board Member A, Senior Executive A and Mr Staley each understood that the
Authority was primarily interested in understanding whether or not Mr Staley had
been in any way involved in, or aware of, Mr Epstein’s alleged crimes. Board
Member A has subsequently informed the Authority that they considered that Mr
Staley had been “entirely consistent” with them in relation to the matters involving
Mr Epstein.
4.56.
Mr Staley informed the Authority that he understood that he was being asked to
confirm that he did not have a “close relationship” with Mr Epstein such that he
could have known or otherwise been involved in any of Mr Epstein’s alleged crimes.
Mr Staley considered that, while he had a “professional, fairly close relationship”
with Mr Epstein, he definitely did not have a “close relationship” with Mr Epstein in
that context, and that he was not personally close to Mr Epstein in any event.
4.57.
Senior Executive A informed the Authority that they would have expected to have
been told about certain interactions between Mr Staley and Mr Epstein, including
those relating to Mr Staley’s visit to Mr Epstein’s ranch (see paragraph 1.19.2 of
Annex B) and Mr Staley’s apparent invitation to Mr Epstein to attend an academic
ceremony for an individual connected to Mr Staley in 2015 (see paragraph 1.26 of
Annex B), and that had they known of these matters they would have asked further
questions and taken any answers into account when drafting the Letter. Senior
Executive A, having subsequently been shown certain email communications
between Mr Staley and Mr Epstein, considered that, albeit taken in isolation, certain
of those communications appeared to show a relationship that did not align with
the way it had been characterised in the Letter.
4.58.
The Authority’s view is that, having regard to the evidence set out at Annex B and
in paragraphs 4.9 to 4.32 above, including the following facts and matters, the
assertion that Mr Staley “did not have a close relationship with Mr Epstein” was
inaccurate and, consequently, misleading:
(1)
Mr Staley himself informed the Authority during the course of its
investigation that he considered that he and Mr Epstein were
“professionally fairly close” or had a “professional, fairly close
relationship”.
(2)
Email communications from Mr Staley to Mr Epstein refer to the strength
of their friendship, and Mr Staley described Mr Epstein as one of his
“deepest” or “most cherished” friends and stated that he had few
friendships as “profound” as his with Mr Epstein. Mr Staley subsequently
informed the Authority that these communications reflected the way he
writes to business contacts and that, whilst he was grateful to Mr Epstein
for his assistance on certain matters, he may have been “gaming the
relationship” by conveying to Mr Epstein that they were closer than, in Mr
Staley’s view, they actually were. In interview, Board Member A agreed
that Mr Staley regularly used affectionate language in his email
correspondence. The Authority’s view is that, whilst Mr Staley may use
a warm tone to communicate with business contacts, his communications
with Mr Epstein were different in tone and nature and strongly suggest
that the relationship between Mr Staley and Mr Epstein was in any case
objectively close.
(3)
Mr Staley travelled to Florida to visit Mr Epstein during his prison sentence
whilst he was on work release in January 2009. He did this due to being
a “loyal person” and “just to show support” to Mr Epstein.
(4)
Mr Staley visited various of Mr Epstein’s properties, including Mr Epstein’s
island in the US Virgin Islands on three separate occasions, in addition to
two further visits to a private marina owned by Mr Epstein nearby his
island, and Mr Epstein’s ranch in New Mexico. The visits to Mr Epstein’s
properties in the US Virgin Islands and New Mexico were for no obvious
business or professional purpose. Mr Staley also visited Mr Epstein in
Palm Beach, Florida to join a celebratory birthday dinner for Mr Epstein,
in addition to more regular visits to Mr Epstein’s home in New York.
(5)
Mr Epstein provided advice and assistance, over several years, to an
individual connected to Mr Staley in connection with their career. In
August 2015, Mr Staley informed Mr Epstein that this advice had been
“the gift of great friendship”.
(6)
Mr Staley confided with Mr Epstein on significant matters relating to Mr
Staley’s career. For example, Mr Staley disclosed to Mr Epstein details of
discussions Mr Staley was having with Barclays that led to his
appointment as CEO in October 2015, having previously discussed
possible appointments to senior positions whilst at, and following his
departure from, JPM. Notably, on 8 October 2015, Mr Staley disclosed to
Mr Epstein the fact of the decision made by the BNC confirming its
approval of Mr Staley’s appointment, which was not in the public domain
and which Mr Staley understood was “very confidential”.
The statement: “[Mr Staley’s] last contact with Mr Epstein was well before he joined
Barclays in 2015”
4.59.
The Letter also stated that “[Mr Staley’s] last contact with Mr Epstein was well
before he joined Barclays in 2015.”
4.60.
Neither Board Member A nor Senior Executive A was aware that Mr Staley was
exchanging emails and speaking on the phone with Mr Epstein in relation to his
prospective appointment as CEO of Barclays (including that they had exchanged
emails about this on 8 and 9 October 2015, following the recommendation of the
BNC) or of the fact that Mr Staley was liaising with Mr Epstein in respect of the
approach from Newspaper A up to 25 October 2015.
4.61.
Senior Executive A drafted the language “well before” into the Letter, on the basis
that they understood that Mr Staley and Mr Epstein had last met in person during
the visit by Mr Staley to Mr Epstein’s island in the US Virgin Islands in April 2015.
Senior Executive A considered that this was “well before” Mr Staley joined Barclays
in December 2015. Senior Executive A informed the Authority that the reference
in the letter to “last contact” was based upon their understanding of when Mr Staley
and Mr Epstein were last in each other’s company, which is what Senior Executive
A had understood was the relevant context of the Authority’s enquiry. Senior
Executive A informed the Authority that they did not have an impression that there
had been any contact between Mr Staley and Mr Epstein around the time of Mr
Staley’s appointment as CEO of Barclays but that they never asked, and did not
recall discussing, whether Mr Staley and Mr Epstein remained in contact by
telephone or email after April 2015.
4.62.
Board Member A informed the Authority that, at the time the Letter was drafted,
they did not know precisely when Mr Staley and Mr Epstein had last met.
4.63.
Mr Staley’s appointment as CEO of Barclays was announced on 28 October 2015
and Mr Staley was in role from 1 December 2015. The statement in the Letter that
Mr Staley’s last contact was “well before he joined Barclays in 2015” was therefore
inaccurate and misleading.
5.
FAILINGS
5.1.
The regulatory provisions relevant to this Notice are referred to in Annex A.
5.2.
Mr Staley was responsible for ensuring that aspects of the Letter that described his
relationship with Mr Epstein were factually accurate. The Letter was inaccurate and
misleading in two respects, about the nature and extent of Mr Staley’s relationship
with Mr Epstein and about the point of their last contact. Mr Staley reviewed the
penultimate draft of the Letter and suggested no amendments to the two
statements that were misleading.
The nature of Mr Staley’s relationship with Mr Epstein
5.3.
The Letter was misleading by stating that Mr Staley “did not have a close
relationship with Mr Epstein”.
5.4.
In forming the view that this statement was misleading, the Authority has had
regard to all the facts and matters set out in Annex B and in paragraphs 4.9 to 4.32
above. In particular, the statement did not fairly and accurately reflect the
following facts and matters, all of which were known to Mr Staley at the time he
approved the Letter:
(1)
Mr Staley confided in Mr Epstein on significant matters relating to Mr
Staley’s career. For example, Mr Staley disclosed to Mr Epstein details of
discussions he was having with Barclays that led to Mr Staley’s
appointment as CEO in October 2015. Notably, on 8 October 2015, Mr
Staley disclosed to Mr Epstein the fact of the decision made by the BNC
confirming its approval of Mr Staley’s appointment, which was not in the
public domain and which Mr Staley understood was “very confidential”.
(2)
The extensive email communications between Mr Staley and Mr Epstein
(including whilst Mr Epstein was serving his custodial sentence), written
in a notably warm tone, including the following emails from Mr Staley to
a. the email of 1 November 2009 in which Mr Staley stated “I owe
you much. And I deeply appreciate our friendship. I have few so
profound.”;
b. the email of 31 January 2015 which stated “The strength of a
Greek army was that its core held shoulder to shoulder, and
would not flee or break, no matter the threat. That is us.”;
c. the email of 13 August 2015 in which Mr Staley stated “The
counsel you have given [an individual connected to Mr Staley]
over the years has been a gift of great friendship.”; and
d. the email of 4 October 2015 in which Mr Staley stated “You never
wavered in our friendship these last three years. That means a
lot too [sic] me.”
(3)
Mr Staley travelled to Florida to visit Mr Epstein during his prison sentence
when he was on work release, and visited various of Mr Epstein’s
properties including the island owned by Mr Epstein in the US Virgin
Islands on three occasions, in addition to two further visits to a private
marina owned by Mr Epstein nearby his island, and his ranch in New
Mexico. Mr Staley also visited Mr Epstein in Palm Beach, Florida to join a
celebratory birthday dinner for Mr Epstein, and made more regular visits
to Mr Epstein’s home in New York.
5.5.
Mr Staley subsequently informed the Authority that he considered that he and Mr
Epstein were “professionally fairly close” or had a “professional, fairly close
relationship”. This contradicts the language used in the Letter.
5.6.
Mr Staley has informed the Authority that his correspondence with Mr Epstein
reflects the way he writes to business contacts and that, whilst he was grateful to
Mr Epstein for his assistance on certain matters, he may have been “gaming the
relationship” by conveying to Mr Epstein that they were closer than, in Mr Staley’s
view, they actually were. Whilst Mr Staley may use a warm tone to communicate
with business contacts, his communications with Mr Epstein were different in tone
and nature and very strongly suggest that the relationship between Mr Staley and
Mr Epstein was in any case objectively close.
5.7.
Consequently, this aspect of the Letter, which made clear that Mr Staley was the
source of the information, was misleading. Mr Staley had the opportunity to correct
the misleading statement that he had “confirmed to us that he did not have a close
relationship with Mr Epstein”, but failed to do so. Mr Staley must have appreciated
that the Authority would rely on this statement and must have been aware of the
risk that it would mislead the Authority. Therefore, by failing to correct the
misleading statement, Mr Staley acted recklessly.
Mr Staley’s last contact with Mr Epstein before he joined Barclays in 2015
5.8.
The Letter was misleading by stating that “[Mr Staley’s] last contact with Mr Epstein
was well before he joined Barclays in 2015”.
5.9.
Mr Staley and Mr Epstein were in contact, at least via email, until 25 October 2015:
this was 3 days before Mr Staley’s appointment as CEO was announced, and only
shortly before 1 December 2015, being the date that Mr Staley formally started in
role (see paragraph 4.63). The matters being discussed between Mr Staley and Mr
Epstein up to and including 25 October 2015, relating to both Mr Staley’s potential
appointment as CEO of Barclays and press enquiries in connection with his likely
appointment regarding his relationship with Mr Epstein, were significant and of
importance to Mr Staley. Consequently, this aspect of the Letter, which made clear
that Mr Staley was the source of the information, was inaccurate and misleading.
5.10.
Mr Staley knew that he had been in contact with Mr Epstein about the progress of
discussions with Barclays that led to Mr Staley’s appointment as CEO, and in
relation to the press enquiries, and that this contact continued until shortly before
his appointment was announced and just a few weeks before he started in role. Mr
Staley had the opportunity to correct this misleading statement in the Letter, but
failed to do so. Mr Staley must have appreciated that the Authority would rely on
this statement and must have been aware of the risk that it would mislead the
Authority. Therefore, by failing to correct the misleading statement, Mr Staley
acted recklessly.
Mr Staley’s explanation and the Authority’s assessment of it
5.11.
Mr Staley did not draft the Letter, and earlier draft versions had included more
detail about the nature and extent of Mr Staley’s relationship with Mr Epstein. Mr
Staley described his relationship with Mr Epstein to various members of senior
management at Barclays, including in the context of the Authority’s enquiry. Mr
Staley, and others at Barclays, understood the Authority’s request, which resulted
in the Letter, as being primarily focussed on whether Mr Staley was aware of, or
had witnessed, any of the alleged criminal activities of Mr Epstein during the course
of their apparent relationship.
5.12.
This does not, however, excuse Mr Staley for failing to correct the two misleading
statements in the Letter:
(1)
Mr Staley was the only person who reviewed or discussed the contents of
the Letter prior to it being finalised, who was able to comment on the
accuracy of these two statements from his own personal knowledge.
Those individuals at Barclays with whom Mr Staley discussed the matter
had, as would have been obvious to Mr Staley at the time, no first-hand
knowledge of the facts relating to the nature of the relationship between
Mr Staley and Mr Epstein, nor of the frequency or extent of their contact.
(2)
By stating that “[Mr Staley] has confirmed to us that he did not have a
close relationship with Mr Epstein”, the Letter implied that there was a
distance between Mr Epstein and Mr Staley that did not accurately reflect
the true position. Had the Letter accurately described the nature of the
relationship between Mr Staley and Mr Epstein, or the point at which the
two last were in contact, the Authority would have been in a position at
that stage to have considered whether it needed to ask further questions
of Mr Staley and seek clarity on the nature and extent of the relationship.
(3)
No individual at Barclays was aware that Mr Staley and Mr Epstein had
discussed press enquiries regarding their relationship, in connection with
Mr Staley’s likely appointment as CEO of Barclays, up until 25 October
2015, or had any knowledge of the fact that Mr Staley had shared
confidential information with Mr Epstein about negotiations relating to his
impending appointment as CEO in October 2015 (including the
confidential decision taken by the BNC on 8 October 2015). Mr Staley
did not inform anybody at Barclays of these matters, which were clearly
relevant to factual assertions that were included in the Letter (and which
were misleading).
5.13.
In fact, Mr Staley consistently did not accurately set out the nature of his
relationship with Mr Epstein to Barclays. In particular:
(1)
In October 2015, in response to the press enquiries relating to Mr Staley’s
likely appointment as CEO, regarding his relationship with Mr Epstein,
Barclays made statements which gave the misleading impression that Mr
Staley and Mr Epstein did not have a close relationship, including that
they had not had a discussion about the recruitment process that year
and that they did not have “anything resembling a close personal
association”. The Authority considers that these statements were based
on information provided by Mr Staley and that, in light of his impending
appointment as CEO, Mr Staley had an interest in giving Barclays the
impression of a greater distance between himself and Mr Epstein than
was the case at this time.
(2)
In September 2019, Mr Staley gave a presentation to the governing board
of Academic Institution A, of which he was a member, to address
enquiries about his relationship with Mr Epstein. The Talking Points were
prepared to assist Mr Staley in making this presentation and subsequently
provided part of the factual foundation for the Letter sent by Barclays to
the Authority. The Talking Points were misleading in various aspects, for
example, they included the inaccurate statements “At no time after his
conviction in 2008 did I allow [Mr Epstein] any connection with any aspect
of my professional life” and “I had limited contact with him post his
conviction”. The Talking Points were based on information provided by Mr
Staley to Barclays.
5.14.
The Authority has concluded that Mr Staley was aware of the risk which his
association with Mr Epstein posed to his reputation and his career, and that this
knowledge is relevant context to Mr Staley’s failure in 2015, and subsequently in
2019, to set out accurately the nature and extent of his relationship with Mr Epstein
to Barclays, and his failure to correct the two misleading statements in the Letter.
5.15.
The role of CEO requires an individual to exercise sound judgement and set an
example to staff at their firm. This is especially important in the context of the
requirement on individuals to act with integrity, be open and cooperative with the
Authority and the PRA, and to disclose appropriately information of which the
Authority would reasonably expect notice.
5.16.
By failing to correct the two misleading statements in the Letter, Mr Staley misled
the Authority. Mr Staley must have appreciated that the Authority would rely on
the content of the Letter and he must have been aware of the risk that the Letter
would mislead the Authority. Therefore, by approving the Letter containing the two
misleading statements, Mr Staley acted recklessly and with a lack of integrity and
failed to comply with ICR 1.
5.17.
Mr Staley must have realised that the Authority’s request to Barclays for
information about his relationship with Mr Epstein was important to the Authority.
By approving the Letter which contained the two misleading statements, without
informing Barclays that the statements were incorrect, Mr Staley failed to be open
and cooperative with the Authority and failed to disclose appropriately information
of which the Authority would have reasonably expected notice. Consequently, Mr
Staley failed to comply with ICR 3 and SMCR 4.
6.
SANCTION
Financial penalty
6.1.
The Authority’s policy for imposing a financial penalty is set out in Chapter 6 of
DEPP. In respect of conduct occurring on or after 6 March 2010, the Authority
applies a five-step framework to determine the appropriate level of financial
penalty. DEPP 6.5B sets out the details of the five-step framework that applies in
respect of financial penalties imposed on individuals in non-market abuse cases.
Step 1: disgorgement
6.2.
Pursuant to DEPP 6.5B.1G, at Step 1 the Authority seeks to deprive an individual
of the financial benefit derived directly from the breach where it is practicable to
quantify this.
6.3.
The Authority has not identified any financial benefit that Mr Staley derived directly
from his breaches of ICR 1, ICR 3 and SMCR 4.
6.4.
Step 1 is therefore £0.
Step 2: the seriousness of the breach
6.5.
Pursuant to DEPP 6.5B.2G, at Step 2 the Authority determines a figure that reflects
the seriousness of the breach. That figure is based on a percentage of the
individual’s relevant income. The individual’s relevant income is the gross amount
of all benefits received by the individual from the employment in connection with
which the breach occurred, and for the period of the breach. Where the breach
lasted less than 12 months, the relevant income will be that earned by the
individual in the 12 months preceding the end of the breach.
6.6.
Mr Staley’s breaches lasted less than 12 months. Accordingly, the relevant income
is his income from 9 October 2018 to 8 October 2019. The Authority considers Mr
Staley’s relevant income for this period to be £5,493,526.
6.7.
In deciding on the percentage of the relevant income that forms the basis of the
Step 2 figure, the Authority considers the seriousness of the breach and chooses a
percentage between 0% and 40%. This range is divided into five fixed levels which
represent, on a sliding scale, the seriousness of the breach; the more serious the
breach, the higher the level. For penalties imposed on individuals in non-market
abuse cases there are the following five levels:
(1)
Level 1 – 0%
(2)
Level 2 – 10%
(3)
Level 3 – 20%
(4)
Level 4 – 30%
(5)
Level 5 – 40%
6.8.
In assessing the seriousness level, the Authority takes into account various factors
which reflect the impact and nature of the breach, and whether it was committed
deliberately or recklessly.
6.9.
DEPP 6.5B.2G(9) lists factors relating to the nature of the breach. Of these, the
Authority considers the following factors to be relevant:
(1)
Mr Staley failed to act with integrity as he recklessly misled the Authority by
failing to correct the two misleading statements in the Letter.
(2)
Mr Staley held a senior position within Barclays and a prominent position
within the financial services industry as CEO of one of the largest global
banks.
(3)
Mr Staley is an experienced industry professional.
6.10.
DEPP 6.5B.2G(11) lists factors tending to show the breach was reckless. Of these,
the Authority considers the following factor to be relevant:
(1)
Mr Staley must have appreciated that there was a risk that his inaction in
failing to correct the two misleading statements in the Letter could result in
the Authority being misled.
6.11.
DEPP 6.5B.2G(12) lists factors likely to be considered ‘level 4 or 5 factors’. Of
these, the Authority considers the following factors to be relevant:
(1)
Mr Staley failed to act with integrity.
(2)
Mr Staley held a prominent position within the financial services industry as
CEO of one of the largest global banks.
(3)
The breaches were committed recklessly as Mr Staley approved the Letter
when he must have been aware of the risk that it would mislead the
Authority.
6.12.
DEPP 6.5B.2G(13) lists factors likely to be considered ‘level 1, 2 or 3 factors’. Of
these, the Authority considers the following factors to be relevant:
(1)
No profits were made, or losses avoided, either directly or indirectly as a
result of Mr Staley’s actions.
(2)
There was little or no loss or risk of loss to consumers, investors or other
market users individually and in general as a result of Mr Staley’s actions.
6.13.
Taking all of these factors into account, the Authority considers the seriousness of
the breaches to be level 4 and so the Step 2 figure is 30% of £5,493,526.
6.14.
Step 2 is therefore £1,648,057.
Step 3: mitigating and aggravating factors
6.15.
Pursuant to DEPP 6.5B.3G, at Step 3 the Authority may increase or decrease the
amount of the financial penalty arrived at after Step 2, but not including any
amount to be disgorged as set out in Step 1, to take into account factors which
aggravate or mitigate the breach.
6.16.
DEPP 6.5B.3G(2) lists factors which may have the effect of aggravating or
mitigating the breach. Of these, the Authority considers the following factor to be
relevant:
(1) The previous disciplinary record and general compliance history of the
individual. Mr Staley was the subject of regulatory action by the Authority
and the PRA in 2018 for breaching ICR 2 in the way he acted in response to
an anonymous letter that Barclays received raising concerns about its hiring
process.
6.17.
The Authority has not identified any factors which mitigate the breaches.
6.18.
Having taken into account the aggravating factor and lack of mitigating factors, the
Authority considers that the Step 2 figure should be increased by 10%.
6.19.
Step 3 is therefore £1,812,862.
Step 4: adjustment for deterrence
6.20.
Pursuant to DEPP 6.5B.4G, if the Authority considers the figure arrived at after Step
3 is insufficient to deter the individual who committed the breach, or others, from
committing further or similar breaches, then the Authority may increase the
penalty.
6.21.
The Authority considers that the Step 3 figure of £1,812,862 represents a sufficient
deterrent to Mr Staley and others, and so has not increased the penalty at Step 4.
6.22.
Step 4 is therefore £1,812,862.
Step 5: settlement discount
6.23.
Pursuant to DEPP 6.5B.5G, if the Authority and the individual on whom a penalty is
to be imposed agree the amount of the financial penalty and other terms, DEPP 6.7
provides that the amount of the financial penalty which might otherwise have been
payable will be reduced to reflect the stage at which the Authority and the individual
reached agreement. The settlement discount does not apply to the disgorgement
of any benefit calculated at Step 1.
6.24.
The Authority and Mr Staley did not reach agreement at Stage 1 and so no discount
applies to the Step 4 figure.
6.25.
Step 5 is therefore £1,812,862.
6.26.
The Authority therefore has decided to impose a total financial penalty of
£1,812,800 (rounded down to the nearest £100 in accordance with the Authority’s
usual practice) on Mr Staley for breaching ICR 1, ICR 3 and SMCR 4.
Prohibition order
6.27.
The Authority has the power to make prohibition orders in respect of individuals
under section 56 of the Act. The Authority’s approach to exercising these powers is
set out at Chapter 9 of the Enforcement Guide.
6.28.
In considering whether to impose a prohibition order, the Authority has had regard
to all relevant circumstances of the case. In particular, the Authority has considered
Mr Staley’s fitness and propriety with regard to his integrity and in respect of his
being open and cooperative with the Authority. The Authority has also had regard
to the period of time that has passed since the events described in this Notice.
6.29.
The Authority considers that Mr Staley acted recklessly and without integrity by
failing to correct the two misleading statements in the Letter. Mr Staley must have
appreciated that the Authority would rely on the content of the Letter and that there
was a risk that the Letter would mislead the Authority.
6.30.
Integrity, being open and cooperative with the Authority at all times, and
demonstrating good judgement are fundamental requirements of senior managers,
particularly a CEO of one of the UK’s most significant financial institutions. These
breaches represented a serious failure of judgement by Mr Staley when dealing
with sensitive matters involving the Authority. The Authority has also had regard
to the fact that Mr Staley was subject to regulatory action by the Authority and the
PRA in 2018, albeit relating to matters not connected to the findings in this Notice.
As a consequence of that action, the Authority would have expected Mr Staley to
have been particularly careful to ensure that the Letter was factually accurate.
6.31.
The Authority therefore expected Mr Staley, as CEO of Barclays, to recognise the
importance of acting with integrity in all of his professional dealings and to
recognise the importance of being open and cooperative with the Authority at all
times. A necessary feature of the effective supervision of firms in the UK is for their
senior managers to be open and frank in their dealings with the Authority, the PRA
and other regulators, particularly where those interactions relate to sensitive or
important matters. When a senior manager of a major financial institution fails to
act with integrity in a way that causes the Authority to be misled, there is a
substantial risk of harm to the Authority’s integrity objective, as such conduct
undermines confidence in the financial markets.
6.32.
Given the nature of the failings described in this Notice, and having regard to the
fact that Mr Staley’s misconduct occurred only a year after regulatory action was
taken against him in 2018, it appears to the Authority that Mr Staley is not a fit
and proper person to perform the role of a CEO or other senior management
function at an authorised or exempt person or exempt professional firm.
6.33.
The Authority considers that, to advance its integrity objective, and given the risk
posed to that objective, it is appropriate and proportionate in all the circumstances
to prohibit Mr Staley from performing any senior management or significant
influence function in relation to any regulated activity carried out by an authorised
person, exempt person or exempt professional firm.
7.
REPRESENTATIONS
7.1.
Annex C contains a brief summary of the key representations made by Mr Staley
in response to the Warning Notice and how they have been dealt with. In making
the decision which gave rise to the obligation to give this Notice, the Authority has
taken into account all of the representations made by Mr Staley, whether or not set
out in Annex C.
8.
PROCEDURAL MATTERS
8.1.
This Notice is given to Mr Staley under sections 57(3) and 67(4) and in accordance
with section 388 of the Act.
8.2.
The following paragraphs are important.
Decision maker
8.3.
The decision which gave rise to the obligation to give this Notice was made by the
RDC. The RDC is a committee of the Authority which takes certain decisions on
behalf of the Authority. The members of the RDC are separate to the Authority staff
involved in conducting investigations and recommending action against firms and
individuals. Further information about the RDC can be found on the Authority’s
committee
The Tribunal
8.4.
Mr Staley has the right to refer the matter to which this Notice relates to the
Tribunal. Under paragraph 2(2) of Schedule 3 of the Tribunal Procedure (Upper
Tribunal) Rules 2008, Mr Staley has 28 days from the date on which this Notice is
given to him to refer the matter to the Tribunal. A reference to the Tribunal is
made by way of a signed reference notice (Form FTC3) filed with a copy of this
Notice. The Tribunal’s contact details are: The Upper Tribunal, Tax and Chancery
Chamber, Fifth Floor, Rolls Building, Fetter Lane, London EC41 1NL (tel: 020 7612
9730; email: fs@hmcts.gsi.gov.uk). Further information on the Tribunal, including
guidance and the relevant forms to complete, can be found on the HM Courts and
Tribunal Service website:
8.5.
A copy of the reference notice (Form FTC3) must also be sent to the Authority at
the same time as filing a reference with the Tribunal. It should be sent to Richard
Topham at the Financial Conduct Authority, 12 Endeavour Square, London E20 1JN.
8.6.
Once any such referral is determined by the Tribunal and subject to that
determination, or if the matter has not been referred to the Tribunal, the Authority
will issue a final notice about the implementation of that decision.
Access to evidence
8.7.
Section 394 of the Act applies to this Notice.
8.8.
The person to whom this Notice is given has the right to access:
(1)
the material upon which the Authority has relied in deciding to give this
Notice; and
(2)
the secondary material which, in the opinion of the Authority, might
undermine that decision.
Third party rights
8.9.
A copy of this Notice is being given to Barclays as a third party identified in the
reasons above and to whom in the opinion of the Authority the matter to which
those reasons relate is prejudicial. As a third party, Barclays has similar rights to
those mentioned in paragraphs 8.4 and 8.8 above in relation to the matters which
identify it.
Confidentiality and publicity
8.10.
This Notice may contain confidential information and should not be disclosed to a
third party (except for the purpose of obtaining advice on its contents). In
accordance with section 391 of the Act, a person to whom this Notice is given or
copied may not publish the Notice or any details concerning it unless the Authority
has published the Notice or those details.
8.11.
However, the Authority must publish such information about the matter to which a
decision notice or final notice relates as it considers appropriate. The persons to
whom this Notice is given or copied should therefore be aware that the facts and
matters contained in this Notice may be made public.
Authority contacts
8.12.
For more information concerning this matter generally, contact Richard Topham
(direct line: 020 7066 1180 or email: richard.topham@fca.org.uk) or Nick Larkman
(direct line: 020 7066 6964 or email: nick.larkman@fca.org.uk) at the Authority.
Chair, Regulatory Decisions Committee
ANNEX A
RELEVANT STATUTORY AND REGULATORY PROVISIONS
RELEVANT STATUTORY PROVISIONS
1.1.
The Authority’s statutory objectives, set out in section 1B(3) of the Act, include the
integrity objective: protecting and enhancing the integrity of the UK financial
system.
1.2.
Section 66 of the Act provides that the Authority may take action against a person
if it appears to the Authority that he is guilty of misconduct and the Authority is
satisfied that it is appropriate in all the circumstances to take action against him.
1.3.
Section 66A of the Act provides that, for the purposes of action by the Authority
under section 66, a person is guilty of misconduct if any of conditions A to C is met
in relation to that person. Section 66A sets out Condition A, which states that:
‘(a) the person has at any time failed to comply with rules made by the [Authority]
under section 64A, and
(b) at that time the person was –
(i) an approved person,
(ii) an employee of a relevant authorised person, or
(iii) a director of an authorised person.’
1.4.
Section 56 of the Act provides that the Authority may make an order prohibiting an
individual from performing a specified function, any function falling within a
specified description or any function, if it appears to the Authority that that
individual is not a fit and proper person to perform functions in relation to a
regulated activity carried on by an authorised person, exempt person or a person
to whom , as a result of Part 20, the general prohibition does not apply in relation
to that activity. Such an order may relate to a specified regulated activity, any
regulated activity falling within a specified description, or all regulated activities.
RELEVANT REGULATORY PROVISIONS
1.5.
Individual Conduct Rule 1 (ICR 1) states: You must act with integrity.
1.6.
Individual Conduct Rule 3 (ICR 3) states: You must be open and cooperative with
the [Authority], the PRA and other regulators.
1.7.
Senior Manager Conduct Rule 4 (SMCR 4) states: You must disclose appropriately
any information of which the [Authority] or PRA would reasonably expect notice.
The Fit and Proper Test for Approved Persons
1.8.
The part of the Authority’s Handbook entitled “The Fit and Proper Test for Approved
Persons” (“FIT”) sets out the criteria that the Authority will consider when assessing
the fitness and propriety of a candidate for a controlled function. FIT is also
relevant in assessing the continuing fitness and propriety of an approved person.
1.9.
FIT 1.3.1G states that the Authority will have regard to a number of factors when
assessing the fitness and propriety of a person. The most important considerations
will be the person’s honesty, integrity and reputation, competence and capability
and financial soundness.
The Authority’s policy for exercising its power to make a prohibition order
1.10. The Authority’s policy in relation to prohibition orders is set out in Chapter 9 of the
Enforcement Guide (“EG”).
1.11. EG 9.1 states that the Authority may exercise this power where it considers that,
to achieve any of its regulatory objectives, it is appropriate either to prevent an
individual from performing any functions in relation to regulated activities or to
restrict the functions which he may perform.
DEPP
1.12. Chapter 6 of DEPP sets out the Authority’s statement of policy with respect to the
imposition and amount of financial penalties under the Act.
ANNEX B
CHRONOLOGY OF MR STALEY’S RELATIONSHIP WITH MR EPSTEIN
1999 TO JULY 2015
Mr Staley’s relationship with Mr Epstein – 1999 to 2008
1.1.
Mr Staley first met Mr Epstein in 1999 or 2000. At that time, Mr Staley was the
Head of JPM’s Private Bank. Mr Staley recalled being asked by JPM to speak or
meet with Mr Epstein on the basis that Mr Epstein was a client of JPM’s Private
Bank. From around 2002, Mr Staley also became the Head of the Asset
Management business at JPM, a role which he held for a time alongside his role as
the Head of the Private Bank.
1.2.
In around 2000 or 2001, it became apparent to Mr Staley that Mr Epstein had “an
incredible network” and Mr Epstein arranged meetings for Mr Staley with prominent
figures in business and politics. Mr Staley recalled at the time being of the view
that Mr Epstein was very knowledgeable about politics, economics and business.
1.3.
Mr Staley was introduced to a prominent figure in the financial services industry
through Mr Epstein and, in 2004, as a consequence of this introduction, was able
to lead an acquisition by JPM of a hedge fund. Mr Staley recalls Mr Epstein playing
an important role in introducing that transaction to Mr Staley and JPM, and in the
subsequent negotiations. Mr Epstein did not, however, formally act for or advise
either Mr Staley or JPM in connection with this transaction.
1.4.
At around this time, the Authority understands that Mr Staley would meet with Mr
Epstein during the daytime at an office that Mr Epstein had access to in New York,
and also at Mr Epstein’s home in New York.
1.5.
In addition to his home in New York, Mr Epstein owned an island in the US Virgin
Islands (named “Little St James”), a ranch in New Mexico, as well as properties in
Florida, London and Paris. At some time in 2005 or 2006, Mr Staley travelled on Mr
Epstein’s private plane to Mr Epstein’s island in the US Virgin Islands with members
of Mr Staley’s family, where they spent the night before transiting onto Mr Staley’s
boat. Mr Epstein was present for this visit by Mr Staley.
Evidence relating to Mr Staley’s relationship with Mr Epstein – 2008 to
1.6.
Mr Staley became the CEO of the Investment Bank at JPM in around September
2009, having been the CEO of Wealth and Asset Management at JPM since 2005.
He remained as the CEO of the Investment Bank until July 2012, at which point he
moved into the role of Chairman of the Investment Bank. In January 2013, Mr
Staley left JPM and became Managing Partner at BlueMountain. Mr Epstein was a
client of JPM’s Private Bank from prior to 2008 until early 2013.
1.7.
Between July 2008 and December 2012, Mr Epstein and Mr Staley exchanged more
than 1,100 emails via Mr Staley’s JPM email address. The emails suggest that they
spoke often on the telephone, as well as meeting in person. On certain occasions,
Mr Staley also used a personal account to correspond with Mr Epstein, albeit that
the nature of these communications was similar to those communications sent via
Mr Staley’s JPM email address. This email correspondence continued after Mr
Epstein ceased to be Mr Staley’s client, following Mr Staley’s move in 2009 to be
1.8.
On 30 June 2008, Mr Epstein pleaded guilty to two criminal state offences, of
soliciting a minor and soliciting a prostitute, and was sentenced to 18 months in
prison. Mr Epstein appears to have been released from prison by 15 August 2009.
He remained a client of JPM, and email correspondence between Mr Epstein and Mr
Staley continued throughout the period of Mr Epstein’s imprisonment.
Mr Staley and Mr Epstein’s networking
1.9.
Mr Staley recalled Mr Epstein providing him with important information about
changes to Mr Staley’s role at JPM, prior to Mr Staley being aware of these changes,
at certain points between 2009 and January 2013.
1.10.
Between 2008 and 2012, Mr Epstein and Mr Staley engaged in networking, and
there is evidence of apparent attempts by Mr Epstein to facilitate introductions for
Mr Staley and/or JPM to a number of high-profile individuals. During this time, Mr
Epstein and Mr Staley also discussed market fluctuations and related issues,
including during the financial crisis of 2008. For example, in an email to Mr Epstein
on 10 October 2008 (at which point Mr Epstein was in prison), Mr Staley stated that
“I am dealing with the Fed on an idea to solve things. I need a smart friend to help
me think through this stuff. Can I get you out for a weekend to help me (are they
listening?). Jes”.
Emails in which Mr Epstein seeks to assist Mr Staley’s career development
1.11.
During this period, Mr Staley and Mr Epstein discussed Mr Staley’s career and steps
that he should take to develop it. For example, on 7 September 2009, at or around
the time of Mr Staley’s appointment as CEO of the Investment Bank at JPM, Mr
Epstein wrote to Mr Staley stating: “I think you should start now, schedule a week
a month world travel. You need more staff. Travel team etc at least two more
people to do your grunt work and prep. Money well spent. They could be analysts
cum gophers.”
1.12.
Further, in May 2010, Mr Epstein wrote to Mr Staley to offer him advice about how
to most effectively answer television interview questions.
Evidence relating to the nature of the relationship
1.13.
During this period, Mr Staley and Mr Epstein also discussed personal matters. This
included introductions made by Mr Epstein to provide assistance to an individual
connected to Mr Staley in respect of their career choices. Mr Staley stated that he
was “deeply appreciative of [Mr Epstein’s] involvement” in this regard.
1.14.
There are also emails where Mr Staley and Mr Epstein refer to the closeness of their
‘friendship’. A number of these emails, including the following examples, were sent
whilst Mr Epstein was serving his prison sentence:
1.14.1. On 11 July 2008, Mr Staley sent an email to Mr Epstein in which he stated:
“I miss you. The world is in a tough place. Hang in there. Jes”, to which
Mr Epstein responded, “So am I”.
1.14.2. On 12 July 2008, Mr Staley wrote to Mr Epstein to inform him that Mr
Staley had gone “…to Maine yesterday to see the new boat. [The boat] is
coming along and will be everything that I hoped for. She wouldn't be
there without your encouragement. 18 months until she is anchored in
front of St Jeff [a name believed to be a reference to Mr Epstein’s island,
Little St James]. I hope we can talk this week. Jes."
1.14.3. On 31 July 2008, in an email from Mr Staley commenting on market
conditions, Mr Staley stated, “I hope you are hangin [sic] there. Just think
of the island and my boat anchored in front. I do.”
1.15.
Following Mr Epstein’s release from prison in 2009, further emails sent by Mr Staley
refer to his ‘friendship’ with Mr Epstein, including the following examples:
1.15.1. On 14 August 2009, Mr Epstein wrote to Mr Staley: “hope you are
enjoying your vacation. When you have some time, I would love to have
you come visit”, to which Mr Staley responded on 15 August 2009,
stating, “I’m having a great time. The boat is a long dream come true. I
will get to Florida soon. I need to shake your hand in freedom. Your
friend. Jes”
1.15.2. On 1 November 2009, whilst staying at Mr Epstein’s ranch in New Mexico,
Mr Staley told Mr Epstein “[…] I owe you much. And I deeply appreciate
our friendship. I have few so profound”.
1.15.3. On 19 September 2010, an email exchange suggests that Mr Staley and
Mr Epstein socialised with each other the previous evening. Mr Epstein
said “Thanks for last night”, to which Mr Staley responded “It was fun.
And great to see you with so many friends. […]”
1.15.4. On 5 March 2011, Mr Staley sent an email to Mr Epstein, which stated:
“[We] were talking tonight about what you have meant to me ... You have
paid a price for what has been accused. But we know what u have done
for us. And we count you as one of our deepest friends. And most honest
of people. Thanks, Jes”
1.15.5. On 23 August 2012, shortly after Mr Staley had left his role as CEO of the
Investment Bank at JPM, Mr Staley sent Mr Epstein an email stating:
“I can't tell you how much your friendship has meant to me. Thank you
deeply for the last few weeks. All will be fine. […] To my most cherished
friend, Jes."
1.15.6. On 31 December 2012, Mr Staley sent an email to Mr Epstein stating:
"I've tried calling a few times, even though the service in [location] is
pretty spotty. Thanks for all the friendship this year. You were
enormously kind and supportive. All looks good for next year. More
freedom, more deals, more building, more things we can do together.
Say hi to everyone. Happy New Year, Jes"
1.16.
Mr Staley has informed the Authority that, on one level, he did have a close
relationship with Mr Epstein and had been appreciative of certain things that Mr
Epstein had done for him. Mr Staley explained, however, that he considered that
he had a “professional, fairly close relationship” with Mr Epstein, and not a personal
friendship with Mr Epstein.
1.17.
Mr Staley suggested that the reference in an email to Mr Epstein being one of his
“deepest friends” reflected the warmth of tone that Mr Staley seeks to convey to
business contacts. Board Member A and Senior Executive C also informed the
Authority that they considered that Mr Staley typically used a warm tone when
communicating with business contacts. Mr Staley also suggested that his reference
to Mr Epstein as his “deepest friend” was in part reflective of Mr Staley “gaming the
relationship we had”, or conveying to Mr Epstein that they were closer than Mr
Staley considered them to be, and that this was a form of “banter”. Mr Staley also
informed the Authority that he never saw, nor was aware of, Mr Epstein’s alleged
crimes, albeit that he knew that Mr Epstein had been convicted for procuring a 17-
year-old for prostitution in 2008 and was aware of Mr Epstein’s indictment in July
2019. The Authority makes no findings that Mr Staley saw, or was aware of, any of
Mr Epstein’s alleged crimes.
Visits to Mr Epstein’s properties outside of New York, and visit to Mr Epstein whilst
serving a custodial sentence
1.18.
On or shortly after 15 January 2009, Mr Staley visited Mr Epstein during his prison
sentence in Florida whilst he was on work release, which followed discussions
seeking to arrange a visit from July 2008. Mr Staley informed the Authority that he
visited Mr Epstein because he (Mr Staley) was a “loyal person” and “just to show
support”.
1.19.
Between 2008 and December 2012, Mr Staley visited (or planned to visit) certain
of Mr Epstein’s properties, in addition to the more regular meetings with Mr Epstein
at Mr Epstein’s home in New York. For example:
1.19.1. There was correspondence in October 2009 discussing a potential visit by
Mr Staley to Mr Epstein’s London house. Mr Epstein and Mr Staley
exchanged emails relating to a possible meeting, which appears not to
have taken place. Mr Epstein wrote, “I screwed up, he just landed in new
your [sic] from london… when are you back?”, to which Mr Staley
responded, “Wednesday, then Washington Thurs and Friday. (and in my
book you never screw up)”. Mr Staley informed the Authority that he
never visited Mr Epstein’s London house.
1.19.2. On or around 1 November 2009, Mr Staley visited Mr Epstein’s ranch in
New Mexico. Mr Epstein was not at the ranch at the time of his visit.
During this visit, Mr Staley sent an email to Mr Epstein which stated: “So
when all hell breaks lose [sic], and the world is crumbling, I will come
here, and be at peace. Presently, I'm in the hot tub with a glass of white
wine. This is an amazing place. Truly amazing. Next time, we're here
together. I owe you much. And I deeply appreciate our friendship. I have
few so profound”. Mr Staley informed the Authority that he did not recall
Mr Epstein or anybody else being at the ranch when he visited (other than
people who worked there), and that he stayed for two hours to view it
and rode a horse, before continuing with his trip.
1.19.3. On 15 January 2010, Mr Staley visited Mr Epstein’s marina in St Thomas,
near to Mr Epstein’s island in the US Virgin Islands, where Mr Staley’s
boat had been given a private mooring by Mr Epstein. Mr Staley informed
the Authority that he recalled mooring his boat at Mr Epstein’s marina,
and that Mr Epstein had briefly “stopped by” to “take a look at” Mr Staley’s
boat, before Mr Staley then departed.
1.19.4. On 20 January 2010, Mr Staley visited Palm Beach, Florida, for dinner
with Mr Epstein and others, as part of a birthday celebration for Mr
Epstein. Mr Staley explained to the Authority that he does not recall this
visit.
1.19.5. Mr Staley also appears to have briefly visited Mr Epstein’s island in the
US Virgin Islands on 21 or 22 January 2011, shortly after Mr Epstein’s
birthday on 20 January. Following correspondence which suggested that
Mr Staley was planning to visit Mr Epstein’s island, on 22 January 2011
Mr Epstein wrote to Mr Staley that: "You are welcome to use jetskis
snorkels movies boats [sic]"; then "Atv's jet skis use the island, full gym
up and running [sic]". Mr Epstein then asked, "did you like the kitchen",
to which Mr Staley responded, stating: "Terrific. Lots of workers. What a
paradise. When I retire, I'm going to put a mooring in front of your dock
for my boat. Amazing place…". Mr Staley informed the Authority that he
did not recall this visit but thought that as part of a regular sailing trip in
the US Virgin Islands it was possible he had docked at the island and
taken a look around.
Evidence relating to Mr Staley’s relationship with Mr Epstein - January
2013 to July 2015
1.20.
On or shortly after 8 January 2013, Mr Staley left JPM and joined BlueMountain, as
Managing Partner. Mr Staley held the role of Managing Partner at BlueMountain
from on or around 8 January 2013 until 1 December 2015, when he was appointed
as CEO of Barclays. During that period, until October 2015, Mr Staley and Mr
Epstein continued to communicate extensively and fairly frequently, exchanging
almost 600 emails.
Evidence of Mr Staley’s interactions with Mr Epstein in a business context
Attempts to onboard Mr Epstein as a client of BlueMountain
1.21.
From February 2013 to March 2013, Mr Staley attempted to onboard Mr Epstein as
a client of BlueMountain. On 25 February 2013, having exchanged correspondence
with Mr Epstein about a possible “BMC investment”, Mr Staley provided Mr Epstein
with fund “subscription documents”, noting, “You’re my first client!”.
1.22.
In March 2013, Mr Staley and Mr Epstein exchanged emails about Mr Epstein’s
possible investment, and on 26 March 2013, Mr Staley’s personal assistant enquired
with colleagues at BlueMountain about whether they had received Mr Epstein’s
“trade documents”.
1.23.
In interview, Mr Staley’s recollection was that Mr Epstein did not, in fact, invest into
a fund managed by BlueMountain, and the Authority has not seen evidence that he
did so.
Continued networking between Mr Epstein and Mr Staley
1.24.
Mr Staley and Mr Epstein continued to network and discuss potential business
opportunities during this period. For example, Mr Epstein and Mr Staley discussed
arrangements for meetings between Mr Staley and certain prominent public figures
and business figures in March 2013, April 2013, September 2013 and May 2014.
Mr Staley also sought to invite a prominent business figure to dinner at Mr Epstein’s
home in New York in June 2014, although it is not clear whether this dinner did, in
fact, take place.
Potential personal business deal
1.25.
In December 2013, Mr Staley and Mr Epstein also discussed a potential investment
that they might make together in a start-up financial services firm based in New
York. Mr Staley did make an investment in the firm (in a personal capacity),
although it appears that Mr Epstein ultimately did not.
Evidence relating to personal matters
Continued assistance from Mr Epstein to an individual connected to Mr Staley
1.26.
Mr Epstein and Mr Staley continued to discuss how Mr Epstein might assist an
individual connected to Mr Staley with certain of their career choices. In March
2015, Mr Staley informally invited Mr Epstein to attend an academic ceremony for
the individual, although it appears that Mr Epstein did not attend.
1.27.
On 13 August 2015, Mr Staley wrote to Mr Epstein, stating: “[…] I know you [sic]
much of a role you had in arriving at this very big day. The counsel you have given
[…] over the years has been the gift of great friendship. Thanks my friend.”
References to nature of relationship
1.28.
Between January 2013 and July 2015, Mr Staley sent further emails describing Mr
Epstein as his “friend”, or wrote in similar terms. For example:
1.28.1. On 1 January 2015, Mr Staley emailed Mr Epstein, stating: “Happy new
year Jeffrey. Thanks for being the friend you are.”
1.28.2. On 31 January 2015, Mr Staley sent an email to Mr Epstein stating: "The
strength of a Greek army was that its core held shoulder to shoulder, and
would not flee or break, no matter the threat. That is us."
1.29.
There is also evidence that Mr Staley and Mr Epstein met socially during this period.
For example:
1.29.1. On 19 September 2014, Mr Epstein’s personal assistant emailed Mr
Staley’s personal assistant and told them “we have ran [sic] out of the
wine Jes likes” and asked whether there was “perhaps another sauvignon
blanc that we could keep on hand for Jes”.
1.29.2. On 23 October 2014, Mr Epstein’s personal assistant emailed Mr Staley’s
personal assistant to ask what Mr Staley would like for dinner that
evening with Mr Epstein: “could you please ask Jes what he is in the mood
for for dinner tonight?! I asked Jeffrey what he would like for dinner and
he requested I ask Jes!””
Evidence relating to Mr Staley’s career
Firm A
1.30.
Mr Staley joined the board of Firm A in May 2015 as a non-executive director and
held this role until 28 October 2015. Mr Staley resigned from this role at the same
time as it was announced that he had been appointed CEO of Barclays.
1.31.
On 27 May 2015, Mr Epstein sent an email to Mr Staley that stated, “I would like a
new investment person. Anyone at [Firm A]?”. Mr Staley informed the Authority
that he did not recall this email or taking any action in relation to it.
1.32.
Subsequently, on 25 June 2015, Mr Epstein sent an email to Mr Staley that asked
whether it would “be possible to set up an account at [Firm A]. Do not want to
cause any problem for you, id start with 100 million”. In response, Mr Staley wrote:
“I am getting closer to the people here. (I’m in the board meeting). Let’s talk about
it.” Mr Staley informed the Authority that he did not recall this email exchange or
ever discussing the matter with Mr Epstein. Mr Epstein did not become a client of
Visits to Mr Epstein’s properties
1.33.
Between January 2013 and April 2015, Mr Staley met with Mr Epstein from time to
time at Mr Epstein’s home in New York and also visited certain of Mr Epstein’s
properties outside of New York.
1.33.1. On 14 January 2015, following an email from Mr Staley to Mr Epstein in
which he had asked for “dock space”, Mr Staley moored his boat at Mr
Epstein’s marina in the US Virgin Islands.
1.33.2. On 12 April 2015, Mr Staley travelled to Mr Epstein’s island with a family
member whilst on vacation, for what he described as a “three-hour stop
in front of, or anchoring in front of his island”. Later that day, Mr Staley
wrote to Mr Epstein following his visit:
“Thanks for the flight and thanks for the lunch. Your place is crazy, and
special. It has a warmth and silliness that makes it yours. I count u as a
deep friend […] All the best.”
REPRESENTATIONS
1. A summary of the key representations made by Mr Staley, and of the Authority’s
conclusions in respect of them (in bold), is set out below.
The focus of the Authority’s enquiry
2. The Authority’s enquiry of 15 August 2019 was made to Barclays and was focussed on,
and was limited to, what Barclays had done to satisfy itself that Mr Staley had not
participated in or been aware of Mr Epstein’s alleged criminal activities. Mr Staley and
the other individuals at Barclays involved in drafting the Letter understood that this
was the focus of the Authority’s enquiry. The brevity of the Letter reflected its purpose,
namely, to reassure the Authority that Barclays had satisfied itself that Mr Staley had
not participated in or been aware of Mr Epstein’s alleged criminal activities.
3. That Barclays understood this to be the focus of the Authority’s enquiry is established
by the fact that the final paragraph of the Letter starts with “In sum”, before proceeding
to state that Barclays had no “cause to suspect that Barclays or [Mr Staley] have played
any role in the activities of Mr Epstein that have been under investigation”. The use
of “In sum” emphasised what Barclays considered to be the focus and context of the
Authority’s request for information.
4. The Authority’s enquiry was not solely concerned with whether or not Mr
Staley had participated in or been aware of Mr Epstein’s alleged criminal
activities. FCA Executive A’s note of their telephone call with Board Member
A on 15 August 2019 makes it clear that the Authority wanted Barclays to
explain how it was satisfied there was no impropriety with respect to the
relationship between Mr Staley and Mr Epstein. This request was made in the
light of recent press reports regarding their relationship, which called into
question Barclays’ CEO’s judgement and potentially his fitness and propriety.
In making the enquiry, the Authority was seeking assurance that Barclays had
discharged its regulatory obligations to ensure it understood and had properly
managed the risks to which it was exposed.
5. The first sentence of the Letter makes clear what Barclays understood the
enquiry to be about, as it says that Barclays was writing in response to a
“request for assurance that we have informed ourselves and are comfortable
in regard to any association of [Mr Staley] or Barclays with [Mr Epstein].” Mr
Staley reviewed and did not query this wording. In interview, when
commenting on his understanding of the Authority’s enquiry, Mr Staley stated
that Board Member A had told him that FCA Executive A “had made an enquiry
about what was Barclays aware of in terms of my relationship with Jeffery
Epstein” and that he also understood the enquiry to be concerned with
whether “Barclays or myself [was] aware of or engaged in the criminal
activities of [Mr] Epstein”. Accordingly, Mr Staley and Barclays clearly
understood the enquiry to be broader than Mr Staley now contends.
6. That this was Barclays’ understanding is supported by an email dated 5
October 2019, in which Board Member A asked Senior Executive A whether
the final paragraph of the Letter was needed, commenting that they thought
the Authority was “probably more worried about judgement than involvement
in wrong-doing”.
Information provided by Mr Staley to Barclays
7. Mr Staley did not mislead Barclays regarding his relationship with Mr Epstein. He
provided Barclays with a substantial amount of information relating to the history and
extent of the relationship. This information was, and was perceived at the time as
being, sufficient for Barclays to answer the Authority’s enquiry, having regard to the
context in which it was made and understood. How Barclays used that information to
respond to the Authority’s enquiry was not a matter determined by Mr Staley. Barclays
was not prevented by Mr Staley from providing a fuller portrayal of his relationship
with Mr Epstein; in late September 2019, Mr Staley had approved an earlier draft of
the Letter which contained detailed information about his relationship with Mr Epstein.
8. Mr Staley did not inform Barclays, at any stage, that he had “not had a close
relationship” with Mr Epstein, and this statement did not reflect what he had told
Barclays. He also did not assert to Barclays that he was last in contact with Mr Epstein
“well before” he joined Barclays. Mr Staley’s clear instructions and consistently stated
position to Barclays were that he had had a professional, fairly close relationship with
Mr Epstein, that he had not had any relationship with Mr Epstein since he joined
Barclays, and that the last occasion when Mr Staley met with Mr Epstein was around
April 2015 when he and a member of his family visited Mr Epstein’s island for a few
hours whilst on vacation. These statements were true and were supported by an
appropriate level of detail. The senior individuals at Barclays who were engaged in the
response to the Authority’s enquiry understood and accepted that Mr Staley’s
relationship with Mr Epstein had at times been close, but that it had not been anything
other than a professional one and that Mr Staley had been entirely unaware of the
unlawful activities for which Mr Epstein had been arrested in July 2019.
9. The Authority acknowledges that Mr Staley provided Barclays with a certain
amount of information regarding his relationship with Mr Epstein, and that
the two misleading statements were not statements that he had made to
Barclays but were instead drafted by Senior Executive A based on the
information provided by Mr Staley to Barclays.
10. However, when the Letter was drafted, there was clearly material information
that Barclays and those involved in drafting the Letter did not know, but which
Mr Staley undoubtedly knew. This included information which makes it
evident that the relationship between Mr Staley and Mr Epstein could not
fairly or accurately be described as not having been a close relationship. In
particular, Barclays was not aware that Mr Staley and Mr Epstein continued
to have extensive and fairly frequent contact after Mr Epstein ceased to be Mr
Staley’s client in 2009, including exchanging almost 600 emails during the
time that Mr Staley was at BlueMountain, or that on several occasions,
including shortly before he was appointed as CEO of Barclays, Mr Staley sent
Mr Epstein emails describing the strength of their friendship. Barclays was
also not aware that Mr Staley had been in regular contact with Mr Epstein up
to and during October 2015, and that they had discussed (i) his potential
appointment, which Mr Staley understood to be “very confidential”, and (ii)
press enquiries in connection with it regarding their relationship. Further,
Barclays was not aware that Mr Staley had attempted to onboard Mr Epstein
as a client of BlueMountain in 2013, that he had invited Mr Epstein to attend
an academic ceremony for an individual connected to Mr Staley in March 2015,
or that their social interactions were more extensive than Mr Staley had
outlined, including that he had actually visited Mr Epstein’s island on three
occasions and had visited Mr Epstein’s private marina on two further
occasions.
11. As described in paragraph 4.57 of this Notice, Senior Executive A informed
the Authority that, had they known about certain interactions between Mr
Staley and Mr Epstein (including those relating to Mr Staley’s visit to Mr
Epstein’s ranch and the academic ceremony invitation), they would have
asked further questions and taken any answers into account when drafting
the Letter. In addition, they considered that certain email communications
between Mr Staley and Mr Epstein appeared to show a relationship that did
not align with the way it had been characterised in the Letter.
12. Mr Staley was the only person at Barclays who knew all the relevant facts
regarding his relationship with Mr Epstein. He was the only person at Barclays
who was able to comment on the accuracy of the two statements from his
own personal knowledge and, having been asked to confirm that the Letter
was fair and accurate, it was his responsibility to ensure they were accurate.
Therefore, the fact that Mr Staley had provided Barclays with certain details
of his relationship with Mr Epstein and that he did not draft the two misleading
statements does not excuse his failure to correct them.
Mr Staley’s approval of the Letter
13. Mr Staley did not participate in the telephone conversations between Barclays and the
Authority on 15 August 2019 and 4 October 2019. He was not involved in the drafting
of the Letter, did not seek to influence it (beyond suggesting, in the early stages,
changes to the Talking Points), and did not make the amendments which introduced
the two allegedly misleading statements after the telephone call of 4 October 2019.
14. When Senior Executive A provided Mr Staley with a draft of the Letter on 6 October
2019, they told Mr Staley that it was based upon the content of a telephone
conversation which had taken place between FCA Executive A and Board Member A on
4 October 2019, as a result of which Senior Executive A considered that the draft would
“meet the [Authority’s] needs”. The draft included the two statements, which Senior
Executive A had introduced after being informed by Board Member A about the 4
October 2019 telephone conversation.
15. Mr Staley questioned the accuracy of the draft letter in respect of the statement that
he did not have a close relationship with Mr Epstein. Senior Executive A provided an
explanation for the revised terms of the draft and Mr Staley reasonably accepted Senior
Executive A’s explanation and advice. Senior Executive A’s advice can reasonably be
characterised as recommending approval of the draft and it can properly be inferred
that it influenced Mr Staley to approve the draft. It was reasonable for Mr Staley to
leave the judgement as to the adequacy or otherwise of the drafting of the Letter to
Senior Executive A, particularly in the knowledge that Senior Executive A was entirely
aware of the relevant background and that the Letter had been drafted on the basis of
discussions which had taken place between Board Member A and the Authority only
two days beforehand. Mr Staley was reasonably entitled to conclude that Board
Member A and Senior Executive A would not have recommended a draft which they
considered was either capable of misleading the Authority or which in any way fell
short of the response that the Authority required.
16. The Authority acknowledges that Mr Staley was not involved in the telephone
conversations between Barclays and the Authority and that he did not draft
the Letter. However, the Authority does not consider that it can be inferred
from the evidence regarding the correspondence between Mr Staley and
Senior Executive A, that Mr Staley approved the draft letter as a result of
Senior Executive A’s advice. Senior Executive A did not advise as to the
accuracy of the two statements, but rather informed Mr Staley that, based on
what Mr Staley had told them, they felt the Letter was fair, but Mr Staley
needed to satisfy himself of this. Further, Senior Executive A was not in the
position to give such advice, given that only Mr Staley knew the true nature
of his relationship with Mr Epstein.
17. Mr Staley cannot have understood Senior Executive A’s indication that the
Letter as drafted was likely to “meet the [Authority’s] needs” as advice to
approve the two factual statements, irrespective of their accuracy. The
evidence suggests that this statement reflected Senior Executive A’s view at
the time, based on what Board Member A had told them about their
conversation with FCA Executive A on 4 October 2019, that the form of the
Letter and the matters it addressed were suitable for Barclays’ response to
the Authority’s enquiry. Mr Staley cannot have thought it reasonable to leave
the judgement as to the accuracy of the drafting of the Letter to Senior
Executive A, given that Senior Executive A told him “we want to be sure that
you feel that the language is fair and accurate” and in circumstances where
he must have known that neither of the two statements was accurate.
Mr Staley’s knowledge
18. It is unfair for the Authority to seek to distinguish Mr Staley’s position from that of
Barclays, on the basis that only Mr Staley knew of the nature and extent of the
relationship between himself and Mr Epstein. Such a distinction ignores the volume of
detailed information that Mr Staley provided to Barclays, of which Senior Executive A
was entirely aware when the Letter was drafted and presented to Mr Staley on 6
October 2019. In order to sustain the distinction, it would be necessary to impute to
Mr Staley an unreasonable and unrealistic realisation that he was required to provide
Barclays with an even greater level of detail concerning the history of his relationship
with Mr Epstein than the detailed account which he had already provided. Such a
distinction also does not stand up to scrutiny when set against the knowledge or
understanding that Senior Executive A and Board Member A had of the nature and
purpose of the Authority’s enquiry.
19. At the time he approved the Letter, Mr Staley did not possess copies of his email
correspondence with Mr Epstein up to and including 25 October 2015; this
correspondence had been via his JPM and BlueMountain email accounts to which he no
longer had access. It is unreasonable to expect, in the absence of that material, that
Mr Staley would necessarily have remembered, almost four years later, when he was
last in email correspondence or telephone contact with Mr Epstein, so as to positively
cause him to question the second allegedly misleading statement.
20. The facts which were not within the public domain and not known to Barclays were the
extent and content of this email correspondence. The facts which were disclosed by
this email correspondence add little if anything to a reasonable interpretation of the
relationship between Mr Staley and Mr Epstein of which Barclays was aware and it is
unreasonable to attribute to Mr Staley a recollection of their content by October 2019.
21. As explained in paragraph 10 above, Barclays was not aware of material
information regarding the nature of Mr Staley’s relationship with Mr Epstein
and when they were last in contact. Only Mr Staley knew whether or not the
Letter accurately characterised his relationship with Mr Epstein and when
they had last been in contact. Accordingly, the Authority considers that
Barclays was in a position which was factually distinguishable from Mr
Staley’s position.
22. The Authority accepts that Mr Staley did not have access to his JPM and
BlueMountain email accounts at the time the Letter was drafted. However,
Mr Staley must have known at that time that he had been in contact with Mr
Epstein with respect to (i) Mr Staley’s potential appointment as CEO of
Barclays and (ii) press enquiries in connection with that appointment and
regarding his relationship with Mr Epstein; Mr Staley must also have known
that this contact continued until shortly before his appointment as CEO was
announced, given that these matters were significant and of importance to
him. Further, the Authority considers that Mr Staley cannot have failed to
recall the extent and nature of his email correspondence with Mr Epstein. As
is clear from the chronology of their relationship summarised in Annex B, the
emails provide ample evidence of social and personal interactions between
Mr Staley and Mr Epstein, and include several emails from Mr Staley referring
to the closeness of their friendship.
23. The Authority also considers it relevant, when considering what Mr Staley
now says he remembered in 2019, that he did not accurately convey the
nature of his relationship with Mr Epstein to Barclays in October 2015, when
discussing press enquiries regarding that relationship and relating to Mr
Staley’s likely appointment as CEO. Mr Staley had access to his BlueMountain
emails at that time and was also in contact with Mr Epstein regarding those
press enquiries. The Authority has concluded that Mr Staley was aware of the
risk which his association with Mr Epstein posed to his reputation and his
career, and that this knowledge is relevant context to Mr Staley’s failure to
provide Barclays in 2015 and 2019 with material information regarding his
relationship with Mr Epstein, and his failure to correct the two misleading
statements in the Letter.
Mr Staley’s relationship with Mr Epstein
24. Mr Staley was correct to describe his relationship with Mr Epstein to the Authority as
having been a “professional, fairly close relationship”. It was a relationship that was
grounded in business. Mr Epstein was a particularly valuable source of information
and had many influential contacts in banking and commerce. It did not involve a
personal friendship and there is no evidence that it did.
25. The email correspondence between Mr Staley and Mr Epstein does not demonstrate a
close relationship, as the extent of the social interaction between them demonstrates
otherwise. The email correspondence establishes regular email contact and,
principally, correspondence concerning business, news items, informal requests for
advice and occasional personal matters, none of which can reasonably be interpreted
as unusual in an important business relationship of this value. There is no evidence
within the emails of Mr Epstein ever visiting Mr Staley’s home, going on holiday with
him and his family, or attending private functions at which Mr Staley’s family were
present.
26. There were four separate aspects of Mr Staley’s personal life which involved Mr Epstein:
the first related to the assistance provided by Mr Epstein to an individual connected to
Mr Staley; the second concerned two separate visits by Mr Staley to Mr Epstein’s island
in the company of family members (one of which was business related); the third
involved Mr Staley visiting Mr Epstein in January 2009 when Mr Epstein was on work
release while serving a prison sentence; and the fourth involved Mr Staley’s visit to Mr
Epstein’s ranch when Mr Epstein was not present. These were extremely isolated
events when viewed in the context of a relationship which extended over a period of
approximately 15 years. The occasional dining invitations to Mr Epstein’s home in New
York, at which many well connected persons were usually present, were for business
purposes.
27. The fact that Mr Staley decided to cease all contact with Mr Epstein when his
appointment as CEO to Barclays was confirmed in October 2015, because he
considered that such a relationship would be inconsistent with that position, is not
reflective of a personal friendship.
28. Mr Staley’s explanation to the Authority that he and Mr Epstein had a
“professional, fairly close relationship” contradicts the statement in the
Letter that they did not have a close relationship. Mr Staley had the
opportunity to correct the Letter, so that it did not inaccurately describe the
nature of their relationship, but he chose not to do so.
29. Furthermore, the extensive email communications between Mr Staley and Mr
Epstein (including whilst Mr Epstein was serving his custodial sentence), and
the tone and nature of those communications (including emails sent by Mr
Staley shortly before he was appointed as CEO of Barclays), strongly suggest
that the relationship between Mr Staley and Mr Epstein was objectively close.
Mr Staley sent emails to Mr Epstein which were written in a notably warm
tone and referred to the strength of their friendship, including those emails
mentioned at paragraph 5.4(2) of this Notice and other emails which
described Mr Epstein as one of his “deepest” or “most cherished” friends.
Notwithstanding that there is no evidence of certain types of social
interactions between Mr Staley and Mr Epstein (for example, of Mr Epstein
ever visiting Mr Staley’s home), there is ample evidence of social and personal
interactions between them. It is therefore evident from the emails exchanged
between them that their relationship could not fairly or accurately be
described as not having been a close relationship.
30. In addition, the four aspects of his personal life that Mr Staley says involved
Mr Epstein support the Authority’s view that the statement that Mr Staley and
Mr Epstein did not have a close relationship is inaccurate and misleading:
a. Mr Staley told Mr Epstein in August 2015 that the counsel he had given
to the individual connected to Mr Staley “has been the gift of great
friendship”.
b. Mr Staley in fact visited Mr Epstein’s island in the US Virgin Islands on
three separate occasions, in addition to two further visits to a private
marina owned by Mr Epstein nearby his island.
c. Mr Staley not only visited Mr Epstein during his prison sentence in
Florida while he was on work release, but also sent Mr Epstein a
number of supportive emails whilst he was serving his prison sentence.
d. On his visit to Mr Epstein’s ranch, Mr Staley told Mr Epstein “[…] I owe
you much. And I deeply appreciate our friendship. I have few so
profound.” Like his visits to Mr Epstein’s properties in the US Virgin
Islands, Mr Staley’s visit to Mr Epstein’s ranch was for no obvious
business or professional purpose.
31. Further, the statement that Mr Staley and Mr Epstein did not have a close
relationship is inconsistent with the fact that Mr Staley confided in Mr Epstein
on significant matters relating to Mr Staley’s career, including his impending
appointment as CEO of Barclays, which was not in the public domain and
which Mr Staley understood was “very confidential”.
32. Mr Staley did not independently decide to cease all contact with Mr Epstein.
Rather, he made that decision on the advice of Senior Executive B that he
should not have any contact with Mr Epstein going forward.
The accuracy and materiality of the two allegedly misleading statements
33. The two statements were not factually inaccurate since they were reasonably required
to be interpreted in the context in which they were provided. Mr Staley did not have
a close relationship with Mr Epstein when considered in the context of the focus of the
Authority’s enquiry. The statement that Mr Staley’s last contact with Mr Epstein was
“well before” he joined Barclays was intended by Senior Executive A to convey the date
of the last meeting between Mr Staley and Mr Epstein, which would have been the last
occasion on which Mr Staley could have been aware of Mr Epstein’s alleged criminal
activities, and so was accurate in that context.
34. The two statements were also not material to answering the Authority’s enquiry and
were not intended to be. The statements were not the focus of the Authority’s enquiry.
They would only have been material had the Authority asked for a description of the
nature and extent of Mr Staley’s relationship with Mr Epstein or been asked to be
informed of all contact between them before and after Mr Staley was appointed to the
position of CEO of Barclays.
35. The Authority considers that both statements were clearly factually
inaccurate. As set out in paragraphs 28 to 31 above, the evidence of Mr
Staley’s interactions with Mr Epstein, along with Mr Staley’s own description
of the relationship to the Authority, demonstrates the inaccuracy of the
statement that Mr Staley and Mr Epstein did not have a close relationship. In
respect of the statement regarding Mr Staley’s last contact with Mr Epstein,
they were in contact regarding Mr Staley’s potential appointment as CEO of
Barclays, and in relation to press enquiries in connection with that
appointment
regarding
their
relationship,
until
shortly
before
his
appointment was announced. The fact that Senior Executive A had in mind
the date when Mr Staley and Mr Epstein last met in person when drafting this
statement does not make it factually accurate. Further, Senior Executive A,
unlike Mr Staley, was not aware that Mr Staley and Mr Epstein continued to
be in contact until October 2015.
36. The Authority does not agree that the statements were accurate in the context
of the focus of the Authority’s enquiry. Both statements implied a greater
distance between Mr Staley and Mr Epstein than was the case prior to Mr
Staley’s appointment as the CEO of Barclays. Further, as explained in
paragraphs 4 to 6 above, the evidence does not support Mr Staley’s assertion
that the Authority was only interested in whether or not Mr Staley had
participated in, or been aware of, Mr Epstein’s alleged criminal activities.
37. The Authority also disagrees with Mr Staley’s assertion that the two
statements were not material. They were clearly material to the Authority’s
request for assurance about the association between Mr Staley and Mr Epstein
as well as its concern about Mr Staley’s judgement in relation to that
association. Further, their materiality is evident from the fact that they were
advanced by Barclays in order to explain why Mr Staley was not aware of Mr
Epstein’s conduct: the first statement indicates a distance between Mr Staley
and Mr Epstein in order to explain why Mr Staley was not aware of Mr
Epstein’s misconduct, while the second statement gives the misleading
impression of temporal distance in the relationship.
Whether the Authority was misled
38. Having regard to the focus of the Authority’s enquiry, the purpose of the Letter, the
factual context in which it was drafted and the materiality of the two allegedly
misleading statements, the Letter did not mislead the Authority.
39. It is disingenuous for the Authority to claim that, in the light of the contents of the
Letter, the Authority concluded that it did not need to make any further enquiries. The
lack of immediate follow-up reflects the fact that the Letter addressed the reason for
the enquiry, namely, to ascertain whether Barclays was satisfied that Mr Staley had
not participated in or been aware of Mr Epstein’s alleged criminal activities.
40. The contents of the Letter might have been expected to have prompted further enquiry
by the Authority, if it did not reflect what had been agreed in the telephone
conversation on 4 October 2019. Board Member A clearly provided a preview of the
proposed response to FCA Executive A on 4 October 2019, which appears to have
resulted in Senior Executive A making the changes introducing the allegedly misleading
statements and the advice to Mr Staley that the letter as drafted was considered to be
sufficient to meet the Authority’s needs. The proposition that the Authority was misled,
that the two statements were material, and that no further questions were asked in
the light of the contents of the Letter, is therefore fundamentally disputed.
41. The documentary evidence demonstrates that: (i) the statement that Mr
Staley and Mr Epstein did not have a close relationship is false, and (ii) Mr
Staley and Mr Epstein were in contact until just before Mr Staley’s
appointment as CEO. Therefore, the two statements were clearly misleading
and, as they were material to the Authority’s enquiry (see paragraph 37
above), they misled the Authority.
42. The Authority was entitled to expect the content of the Letter to be an
accurate characterisation of the nature of the relationship between Mr Staley
and Mr Epstein. The Authority relied on the information provided by Barclays
in order to determine what further action to take, if any. The Letter, on its
face, did not give rise to any need to seek clarification. FCA Executive A’s
interpretation of the Letter was that Barclays and Mr Staley were confirming
that Mr Staley’s relationship with Mr Epstein was not of a personal nature but
was instead a client/business relationship which had ceased a significant
period of time prior to Mr Staley joining Barclays. As a result of the Letter
and the assurances it contained, the matter of Mr Staley’s relationship with
Mr Epstein was reasonably not considered further by the Authority until
additional information came to light a few weeks later. Had the Letter
accurately described the nature of the relationship between Mr Staley and Mr
Epstein, or the point at which the two last were in contact, the Authority
would have been in a position at that stage to have considered whether it
needed to ask further questions of Mr Staley and seek clarity about the nature
and extent of the relationship.
43. The amendments to the draft of the Letter following the 4 October 2019
telephone call, which resulted in the two misleading statements being
introduced, support the Authority’s view that the statements were material
and relevant to the Authority. The fact that the Letter was considered by
Senior Executive A to be sufficient to meet the Authority’s needs does not
mean that it was reasonable for Mr Staley to approve the Letter, in
circumstances where (i) he must have known that the two statements were
inaccurate, and (ii) he was the only person who reviewed or discussed the
contents of the Letter prior to it being finalised, who was able to comment on
the accuracy of the two statements from his own personal knowledge.
Mr Staley’s account to Barclays of the nature of his relationship with Mr Epstein
44. The allegation that Mr Staley consistently did not accurately set out the nature of his
relationship with Mr Epstein to Barclays is wrong and unfair. It is not the basis of the
case against Mr Staley and is irrelevant to the case against him based on the two
statements in the Letter.
45. Barclays’ statement in response to press enquiries in 2015 (denying that Mr Epstein
and Mr Staley had a close personal relationship) was accurate and consistent with what
was stated in the Letter. The press interest was in the context of allegations of sexual
misconduct by Mr Epstein.
46. Mr Staley was only provided with a version of the letter containing the statement “[Mr
Staley] confirms that he has had no contact with [Mr Epstein] nor discussion of this
matter this year” after it was sent and so he had no opportunity to correct it. In any
event, Senior Executive B knew that Mr Staley’s contact with Mr Epstein had continued
up until October 2015. Mr Staley disputes any suggestion that he told anyone at
Barclays that he had no contact with Mr Epstein in relation to the recruitment process
in 2015.
47. The Talking Points were not drafted by Mr Staley, were intended to be no more than
an aide memoire for the purposes of an oral presentation by Mr Staley to Academic
Institution A and did not set out the full extent of the information provided by Mr
Staley.
48. The Talking Points drew attention to the fact that Mr Staley had many business
meetings with Mr Epstein, he attended dinners hosted by Mr Epstein, he visited Mr
Epstein’s island and he visited Mr Epstein while Mr Epstein was on work release from
prison. In so far as Mr Staley did not inform Barclays of some of the details of his
relationship with Mr Epstein, it is unreasonable for the Authority to contend either that
he should have done so or that this constituted a pattern of misleading conduct. Mr
Staley could not reasonably have been expected to provide Barclays with every aspect
of his professional and commercial involvement with Mr Epstein given the context of
the media interest in 2019 and the context of the Authority’s request for reassurance.
49. The evidence supports the Authority’s conclusion that Mr Staley consistently
did not accurately set out the nature and extent of his relationship with Mr
Epstein to Barclays. The Authority has concluded that, both in 2015 and in
2019, Mr Staley was aware of the risk which his association with Mr Epstein
posed to his reputation and his career. The Authority considers this is relevant
context in assessing Mr Staley’s failure to correct the two misleading
statements.
50. In October 2015, Barclays made inaccurate statements about Mr Staley’s
relationship with Mr Epstein to the press on the basis of information provided
to Barclays by Mr Staley. Notwithstanding the context of the press enquiries,
Mr Staley did not reveal to Barclays that he had shared with Mr Epstein
confidential information relating to the process of his appointment as CEO.
The Authority considers that, in the light of his impending appointment as
CEO, Mr Staley had an interest in giving Barclays the impression of a greater
distance between himself and Mr Epstein than was the case at the time.
51. The Authority considers that the statement made by Barclays to a journalist
prior to an article published on 1 November 2015, that Mr Staley and Mr
Epstein did not have “anything resembling a close personal association”, was
inaccurate for the same reasons as the statement in the Letter that they did
not have a “close relationship” was inaccurate.
52. The statement that Mr Staley and Mr Epstein had not discussed Mr Staley’s
potential appointment as the CEO of Barclays in 2015 was also inaccurate, as
Mr Staley must have known at the time. Mr Staley’s denial that he told anyone
at Barclays that he had had no such contact with Mr Epstein is inconsistent
with the evidence of Senior Executive B, who told the Authority in interview
that they were very assiduous to ensure that what Barclays asserted was in
accordance with what Mr Staley recollected. As Senior Executive B had no
previous knowledge of the relationship between Mr Staley and Mr Epstein,
and as the information they provided to Law Firm A was based on information
that they had received from Mr Staley, the Authority considers it reasonable
to conclude that Mr Staley did inform Senior Executive B that he had had no
discussions with Mr Epstein in connection with the recruitment process in
2015. The Authority acknowledges that Mr Staley does not appear to have
seen the statement until after the letter containing it was sent, but there is
also no evidence that Mr Staley subsequently clarified the position.
53. Whilst the Talking Points were not drafted by Mr Staley, they were prepared
on the basis of information provided by him. Although they contained certain
information regarding Mr Staley’s relationship with Mr Epstein, they also
included some materially inaccurate statements which demonstrate that, as
at October 2015, Mr Staley had not accurately set out the nature and extent
of his relationship with Mr Epstein to Barclays. In particular, the Talking
Points falsely stated, “At no point after his conviction in 2008 did I allow [Mr
Epstein] any connection with any aspect of my professional life” and, “I had
limited contact with him post his conviction”. This was therefore not simply
a matter of Mr Staley not informing Barclays of all details of his relationship
with Mr Epstein, but instead involved him in giving Barclays a misleading
impression of the nature and extent of that relationship.
Failings in the Authority’s management of its enquiry
54. The Authority’s management of its enquiry is largely, if not wholly, responsible for the
alleged deficiencies in the Letter. There were significant evidential and procedural flaws
in the Authority’s process, both before and after the Letter was sent.
55. The Authority failed to specify in the telephone call of 15 August 2019 the extent and
detail of the information required and failed to formalise its enquiry in writing. This
created uncertainty within Barclays as to what was required and is likely to have
influenced the final draft of the Letter. The Authority also failed to make a note of or
formalise in writing the content of the telephone call of 4 October 2019, which clearly
influenced the changes to the draft made by Senior Executive A on 5 October 2019.
Mr Staley has been seriously prejudiced as a result.
56. The Authority unreasonably did not give Mr Staley or Barclays an opportunity to
respond to its concern that the Letter did not contain accurate information before
commencing its investigation. Rather than immediately commence an investigation,
the Authority should have explored whether there had been a misunderstanding as to
the nature and extent of the Authority’s enquiry. A request for clarification would have
revealed that Mr Staley had provided Barclays with a substantial amount of information
in respect of his relationship with Mr Epstein, which had been incorporated into earlier
drafts. Further, it would have revealed that Mr Staley did not inform Barclays that he
did not have a close relationship with Mr Epstein or that his last contact with Mr Epstein
was well before he joined Barclays.
57. The fact that the Authority’s request to Barclays was not made in writing does
not excuse or mitigate Mr Staley’s conduct, nor does the lack of a record of
the telephone call of 4 October 2019. It is clear from the Letter that Barclays
understood what the Authority expected of it. In any event, regardless of
whether there was any uncertainty within Barclays as to what was required,
there cannot have been any doubt that it was required to provide a factually
accurate response.
58. The Authority does not consider that it was unreasonable or unfair to
commence an investigation, and not seek clarification from Barclays and/or
Mr Staley, after it received information following receipt of the Letter, which
suggested that the Letter included two misleading statements. The Authority
reasonably expects to be provided with accurate information by the firms and
individuals it regulates and to be able to rely on this information. The
Authority does not consider that its approach has caused any prejudice to Mr
Staley, as he has had the opportunity during the course of the Authority’s
investigation and these RDC proceedings to explain why the statements were
made.
Mr Staley did not act recklessly and did not breach ICR 1
59. The Authority cannot establish, as a matter of fact and law, that Mr Staley acted
recklessly. In order to prove recklessness, it is necessary for the Authority to establish
that Mr Staley was aware of a risk that the Authority might be misled and chose to
disregard it. Mr Staley acted on his understanding of the purpose of the enquiry made
to Board Member A, and the advice provided to him by Senior Executive A that the
Letter would meet the Authority’s needs, and the proper inference to be drawn from
the evidence is that he did not perceive a risk that the Authority might be misled. Mr
Staley’s actions and omissions, in not correcting or altering the draft of the Letter
presented to him on 6 October 2019, constituted no more than inadvertence on his
part in failing to ensure that the Letter reflected his consistent instructions to Barclays,
and do not amount to recklessness.
60. Further, there was no significant risk that the Authority might be misled, given the
purpose of its enquiry and the reported terms of the telephone conversation of 4
October 2019. The two statements were not material to the Authority’s enquiry and
the Authority was not in fact misled.
61. As the allegation that Mr Staley acted with a lack of integrity is grounded, and is entirely
dependent, upon the allegation that he acted recklessly, if recklessness is not
established then there would be an insufficient basis for concluding that Mr Staley
acted without integrity in breach of ICR 1. Further, while reckless conduct is capable
of resulting in a finding of a lack of integrity, the two are not synonymous.
62. The Authority considers that Mr Staley must have appreciated that the
Authority would rely on the contents of the Letter. The Authority relies on
accurate information from firms and individuals approved to perform senior
management functions to allow it to effectively regulate and make enquiries
as necessary, based on the information provided. Regardless of his
understanding of the primary focus of the Authority’s enquiry, Mr Staley must
have appreciated that the two statements were material to the Authority’s
enquiry, as they implied a greater distance between Mr Staley and Mr Epstein
than was the case prior to Mr Staley’s appointment as CEO of Barclays, and
were advanced by Barclays in order to explain why Mr Staley was not aware
of Mr Epstein’s conduct. In any case, as Barclays’ CEO, it must have been
obvious to Mr Staley that the response needed to be prepared with care and
not be misleading.
63. Mr Staley must also have been aware that the two statements were
inaccurate. In interview he characterised his relationship with Mr Epstein as
being a “professional, fairly close relationship”, which contradicts the
wording in the Letter that “he did not have a close relationship with Mr
Epstein”. As noted in paragraph 22 above, Mr Staley must have known that
he was in contact with Mr Epstein until just before he was appointed as CEO
of Barclays, given that the matters they discussed related to Mr Staley’s
potential appointment and press enquiries in connection with his likely
appointment regarding his relationship with Mr Epstein, and so were
significant and of importance to Mr Staley. He must therefore have known
that the statement that his last contact with Mr Epstein was “well before” he
joined Barclays was inaccurate.
64. As Mr Staley must have been aware that the Authority would rely on the
contents of the Letter, and that the two statements were inaccurate, it is not
credible for Mr Staley to assert that he was not aware that, in allowing
inaccurate information to be contained in the Letter, there was a risk that the
Authority would be misled.
65. As set out in paragraphs 16 and 17 above, the Authority does not consider it
was reasonable for Mr Staley to rely on Senior Executive A’s view that the
Letter would meet the Authority’s needs. Mr Staley was the only person who
reviewed or discussed the contents of the Letter prior to it being finalised,
who was able to comment on the accuracy of the two statements from his
own personal knowledge. Senior Executive A had no first-hand knowledge of
the facts relating to the nature of the relationship between Mr Staley and Mr
Epstein, or of the frequency or extent of their contact, and was unaware of
material information relevant to the accuracy of the statements, which Mr
Staley had failed to provide to Barclays. Mr Staley was aware of this and so
must have realised that Senior Executive A’s comment that the Letter would
meet the Authority’s needs reflected their view that the form of the Letter and
the matters it addressed were suitable for Barclays’ response to the
Authority’s enquiry, and was not a comment on the factual accuracy of its
contents.
66. Mr Staley’s failure to correct the statements cannot reasonably be described
as inadvertence, carelessness or negligence. He was expressly asked to
consider whether the language used was fair and accurate, and he had the
benefit of discussing the Letter with Senior Executive A. He knew that the
statements were introduced by Senior Executive A following Board Member
A’s call with FCA Executive A on 4 October 2019 and he must therefore have
realised that they were connected to Barclays’ understanding that the Letter
would “meet the [Authority’s] needs”, which ought to have made him
particularly focus on whether they were accurate. He must have known that
the Authority would determine whether to take further action upon receipt of
the Letter: he had ample opportunity to correct the statements but did not do
so. Further, the Authority considers that the fact that Mr Staley did not
accurately set out the nature and extent of his relationship with Mr Epstein to
Barclays in October 2015, and subsequently in 2019, supports its conclusion
that Mr Staley’s approval of the Letter containing the misleading statements
was not inadvertent, careless or negligent. The Authority therefore considers
that it is reasonable and appropriate to conclude that Mr Staley acted
recklessly.
67. The Authority agrees that recklessness is not synonymous with a lack of
integrity. However, recklessness as to the truth of statements made to others
who will or may rely upon them is a well-recognised example of a lack of
integrity. In the circumstances, the Authority considers that Mr Staley’s
recklessness constitutes a lack of integrity and that he therefore failed to
comply with ICR 1.
The statement regarding the nature of Mr Staley’s relationship with Mr Epstein
68. The evidence does not support a finding that Mr Staley was aware of a risk that the
statement that he did not have a close relationship with Mr Epstein might mislead the
Authority and/or that he nonetheless chose to take that risk. Instead, it supports a
finding that Mr Staley considered the risk that the draft of the Letter provided to him
on 6 October 2019 might not address the substance of the Authority’s enquiry, as a
result of which, on Mr Staley’s initiative, he questioned the wording of the statement
in a telephone conversation with Senior Executive A, who provided him with
appropriate assurances.
69. The evidence therefore gives rise to the inference that Mr Staley approved the draft of
the Letter as a result of Senior Executive A’s advice, and that upon receiving and
accepting that advice Mr Staley did not perceive a risk that the Authority would be
misled. Further, it would be illogical to reach the conclusion that Mr Staley decided to
take the risk of misleading the Authority and/or was indifferent as to the consequences
of a risk of which he was aware, given that he had already provided Barclays with a
substantial amount of information as to his relationship with Mr Epstein in order to
permit Barclays to respond to the Authority.
70. The Authority considers that Mr Staley must have been aware of the risk that
the statement that he did not have a close relationship with Mr Epstein might
mislead the Authority. Although Senior Executive A told Mr Staley that they
considered that the draft letter would meet the Authority’s needs and that the
letter as drafted was fair, they also made it clear that Mr Staley would need
to satisfy himself of this. Mr Staley must have known that the statement that
he did not have a close relationship with Mr Epstein was inaccurate. Unlike
Senior Executive A, he knew that he had had extensive email communications
with Mr Epstein for many years before joining Barclays and that he had told
Mr Epstein on several occasions how much their relationship meant to him,
and he also knew that he had confided in Mr Epstein on significant matters
relating to Mr Staley’s career, including his potential appointment as CEO of
Barclays. Further, Mr Staley knew that he had not informed Barclays of these
matters.
71. The Authority therefore does not agree with Mr Staley’s submission that the
evidence gives rise to the inference that Mr Staley approved the draft letter
because of Senior Executive A’s advice. Given his knowledge of the nature of
his relationship with Mr Epstein, Senior Executive A’s view that the Letter as
drafted was fair could not reasonably have assured Mr Staley that there was
no risk that it could mislead the Authority. In addition, as mentioned in
paragraph 17 above, Mr Staley cannot have thought it reasonable to leave the
judgement as to the accuracy of the drafting of the Letter to Senior Executive
A, given that Senior Executive A told him “we want to be sure that you feel
that the language is fair and accurate”.
The statement that Mr Staley’s last contact with Mr Epstein was well before he joined
Barclays
72. This statement was drafted by Senior Executive A, based upon their understanding
that Mr Staley’s last meeting with Mr Epstein had been around April 2015 and that that
information was in the public domain. Mr Staley’s position, as outlined to Barclays on
many occasions, was that he had last met with Mr Epstein around April 2015 and that
he had not had any contact with Mr Epstein since joining Barclays. Senior Executive A
did not ask when Mr Staley and Mr Epstein were last in telephone or email contact and
the statement was not an attempt to identify the last time when any contact was made
between them. It would be unreasonable to conclude that Mr Staley should have raised
this, given the context and purpose of the enquiry, as understood by him and Barclays.
73. Mr Staley had not sought to conceal the fact that he had been in contact with Mr Epstein
more recently, since he had made Senior Executive B aware that as of October 2015
there had been reasonably recent contact of some form. Further, Senior Executive B
stated in interview that they would have understood the phrase “well before he joined
Barclays” to mean that Mr Staley’s last contact with Mr Epstein was prior to November
2015, which is factually correct. This supports the conclusion that Mr Staley had given
to Barclays the information that he had remained in contact with Mr Epstein until days
before his appointment was announced and undermines the Authority’s case that Mr
Staley was responsible for misleading the Authority in relation to this statement.
74. Unlike Senior Executive A, Mr Staley knew that he had been in contact with
Mr Epstein until shortly before his appointment as CEO of Barclays was
announced and just a few weeks before he started in role, and so he must
have known that the statement that they had last been in contact “well before
he joined Barclays” was inaccurate. Mr Staley must have appreciated that the
Authority would rely on this statement and that there was a risk that the
Authority would be misled. Mr Staley had the opportunity to correct this
statement and it was not reasonable for him to approve a statement that he
must have known might mislead the Authority.
75. Although Senior Executive B had the impression from their discussions with
Mr Staley in October 2015 that Mr Staley had had reasonably recent contact
with Mr Epstein, Senior Executive B was not aware that they had been in
contact in respect of Mr Staley’s potential appointment as CEO of Barclays or
in respect of the press enquiries in connection with his likely appointment in
relation to their relationship. Nor is it clear from the evidence that Senior
Executive B was aware that they had continued to be in contact until shortly
before Mr Staley’s appointment as CEO of Barclays was announced. Further,
Senior Executive B was not involved in the preparation of the Letter, was not
involved in any discussions that led to its creation and did not see the draft of
the Letter containing the statement that Mr Staley’s last contact with Mr
Epstein was “well before he joined Barclays”. In the circumstances, the
Authority concludes that Mr Staley acted recklessly in failing to correct this
statement.
Mr Staley did not breach ICR 3 or SMCR 4
76. The alleged contraventions of ICR 3 and SMCR 4 are associated, on the Authority’s
case, with the circumstances in which the draft letter of 6 October 2019 was approved.
On the Authority’s own case, inadvertence, carelessness or mere negligence is
insufficient to establish a lack of integrity and would be insufficient to establish a failure
to comply with ICR 3 or SMCR 4.
77. Mr Staley was open and cooperative with the Authority at all times and so did not
breach ICR 3. He provided Barclays with detailed and accurate information concerning
the history of his relationship with Mr Epstein, without access to emails or any other
material to aid his recollections. He was aware that that information was to be used
by Barclays for the purpose of responding to the Authority’s enquiry of 15 August 2019.
He was involved in correcting some of the drafts of the Letter and was open and
cooperative at all times with Barclays which, rather than Mr Staley, had the
responsibility of responding to the Authority.
78. Mr Staley did not fail to disclose appropriately any information about which the
Authority would reasonably expect notice and so did not breach SMCR 4. Mr Staley
was not a party to the dialogue between Barclays and the Authority, but he was aware
of the Authority’s enquiry and he provided appropriate and accurate information to
Barclays so that Barclays could formulate the necessary response. Having provided
Barclays with detailed and accurate instructions, he was entitled to assume that those
who had been involved in or were aware of the discussions that had taken place with
FCA Executive A were best placed to judge what was to be conveyed to the Authority.
79. The Authority acknowledges that Mr Staley provided Barclays with certain
information regarding his relationship with Mr Epstein. However, he did not
inform Barclays of material facts and matters, in particular those summarised
in paragraph 10 above, which demonstrate the inaccuracy of the two
statements in the Letter. Although Mr Staley did not have access to his JPM
or BlueMountain emails at the time the Letter was drafted, he must have
known that: (i) his relationship with Mr Epstein could not fairly or accurately
be described as not having been a close relationship, and (ii) he had been in
contact with Mr Epstein regarding his potential appointment as CEO of
Barclays until shortly before he was appointed to that role.
80. Mr Staley must have realised that the Authority’s request to Barclays for
information about his relationship with Mr Epstein was important to the
Authority. Although he questioned the “close relationship” wording which
had been inserted by Senior Executive A, it was not reasonable for him to
approve that wording, on the basis that Senior Executive A considered that
the letter as drafted was fair, based on what Mr Staley had told them about
the relationship. Senior Executive A told Mr Staley that he needed to satisfy
himself that the language was fair and accurate and, as would have been
obvious to Mr Staley at the time, he was the only person who reviewed or
discussed the contents of the Letter prior to it being finalised, who was able
to comment on the accuracy of the two statements from his own personal
knowledge. Mr Staley must also have realised that, although the Letter was
from Barclays, that did not obviate his responsibility to ensure that the
information contained in the Letter regarding his relationship with Mr Epstein
was accurate. Accordingly, by approving the Letter which contained the two
misleading statements without informing Barclays that the statements were
incorrect, Mr Staley failed to be open and cooperative with the Authority in
breach of ICR 3 and failed to disclose appropriately information of which the
Authority would have reasonably expected notice in breach of SMCR 4.
81. In the circumstances, it is not appropriate to impose a financial penalty on Mr Staley.
Alternatively, if it is concluded that Mr Staley acted negligently, only a moderate
financial penalty would be appropriate. The proposed penalty is grossly
disproportionate.
82. The calculation of Mr Staley’s relevant income at Step 2 of the penalty calculation is
flawed as it includes an amount in relation to unvested shares that Mr Staley was
awarded. These unvested shares have been suspended by Barclays pending further
developments in these proceedings. Since the shares have not vested and their vesting
is contractually contingent, it is not possible to conclude that the value of the unvested
shares has been ‘received’ by Mr Staley for the period in question, and so they should
not count as relevant income as defined in DEPP 6.5B.2G(1). Further, Enforcement’s
attempt to determine a value for the unvested shares is speculative and does not
proceed on a sound evidential basis. Accordingly, the calculation of Mr Staley’s
relevant income should disregard any part of the value of the unvested shares.
83. The seriousness of the breach should not be considered to be level 4. If there was any
breach by Mr Staley, its seriousness would be more appropriately fixed at level 1 or 2:
a. The Authority’s concern was to obtain an assurance that Barclays had satisfied
itself that there was no impropriety in the relationship between Mr Staley and
Mr Epstein in the light of the wider allegations against Mr Epstein. Board
Member A on behalf of Barclays was so satisfied. The Authority has made no
finding that there was any such impropriety.
b. There is no reasonable likelihood of any recurrence of the conduct in question,
as the circumstances were quite exceptional.
c. No financial benefit accrued to Mr Staley and no loss was avoided. Any breach
did not have the capacity to impact on the orderly conduct of markets or result
in any loss of confidence.
84. The previous regulatory action taken by the Authority and the PRA against Mr Staley
in 2018 should not be considered an aggravating factor at Step 3 of the penalty
calculation, as it has no relevance to this case.
85. The Authority considers that it is appropriate, and in accordance with the
Authority’s penalty policy as set out in Chapter 6 of DEPP, to impose a
financial penalty on Mr Staley in respect of his breaches of ICR 1, ICR 3 and
SMCR 4. As described in section 6 of this Notice, the Authority has calculated
the financial penalty by applying the five-step framework set out in DEPP
6.5B. The Authority does not consider the resulting penalty of £1,812,800 to
be disproportionate to the breaches, given the seriousness of the breaches
(which include acting with a lack of integrity) and the level of Mr Staley’s
relevant income.
86. The Authority considers that it is appropriate to include in the calculation of
his relevant income the deferred shares earned by Mr Staley during the
Relevant Period which have not yet vested. A person who earns deferred
shares has a reasonable appreciation of the likelihood that they will ultimately
receive them and factors that likelihood into their assessment of their
remuneration. The Authority considers that all benefits awarded for
performance in the period when the breach occurred, and which at the time
the individual in question reasonably expected to receive, should be included
in the calculation of their relevant income, including benefits to be received
in future periods.
87. As the vesting of the deferred shares awarded to Mr Staley is contingent on
achieving certain performance metrics, the vesting of the full amount of the
award is not guaranteed, and so the Authority considers their value should be
adjusted to reflect their contingent nature. The Authority considers it
reasonable to apply a contingency adjustment to the value of the deferred
shares based on the average percentage of deferred shares awarded to Mr
Staley in previous years, and so has taken that approach.
88. The Authority considers it is unrealistic to place zero value on the shares. At
the time that they were earned, it is extremely unlikely that Barclays or Mr
Staley or anyone else would have considered them to be worthless. They
formed part of Mr Staley’s remuneration package and must have had a
meaningful value. Further, Barclays has not yet made a decision in respect of
the unvested shares, and it cannot be assumed that Barclays will act in a
particular way. In any event, the possibility that Barclays will not award any
of the shares to Mr Staley, if he is found to have committed misconduct, does
not make it appropriate to attribute zero value to the shares, as that would
then make the finding of misconduct determinative of the level of relevant
income.
89. The Authority considers the seriousness of Mr Staley’s breaches to be level 4.
The Authority has taken into account the relevant factors listed in paragraphs
6.9 to 6.12 of this Notice in reaching that conclusion. The factors mentioned
by Mr Staley do not affect the Authority’s view as to the seriousness of his
breaches:
a. The Authority has made no findings at all as to whether Mr Staley saw,
or was aware of, any of Mr Epstein’s alleged crimes. That is beyond the
ambit of this case, which is concerned with the factual accuracy of
statements made to the Authority regarding the nature and recency of
Mr Staley’s relationship with Mr Epstein.
b. The
Authority
does
not
agree
that
these
were
exceptional
circumstances, such that there is no reasonable likelihood of any
recurrence of the misconduct. The circumstances in question required
Mr Staley, as the CEO of Barclays, to ensure that information provided
by Barclays to the Authority was accurate and not misleading. Mr
Staley’s failure to ensure the Letter was accurate and not misleading
raises concerns about his judgement and candour when communicating
with the Authority.
c. The fact that no profits were made, or losses avoided, either directly or
indirectly as a result of Mr Staley’s actions, is a factor mentioned in
paragraph 6.12 of this Notice. The Authority does not consider the
impact of Mr Staley’s breaches on the markets to be a relevant factor
in this case, but is of the view that a failure by a CEO of a major bank
to act with integrity or to be open and cooperative with the Authority
does have the potential to adversely affect confidence in the markets.
90. The Authority does not agree that the regulatory action taken by the Authority
and the PRA against Mr Staley in 2018 has no relevance to this case. Mr
Staley’s reckless failure to correct the misleading statements in the Letter
occurred only a year after that regulatory action which, like this case, involved
a failure of judgement by Mr Staley. As a consequence of that regulatory
action, the Authority would have expected Mr Staley to have been particularly
careful to ensure that the Letter was factually accurate. That it is appropriate
to regard the previous regulatory action taken against Mr Staley as an
aggravating factor is also consistent with DEPP 6.5B.3G, which includes “(i)
the previous disciplinary record and general compliance history of the
individual” among a list of factors which may have the effect of aggravating
or mitigating the breach.
91. As Mr Staley did not act with a lack of integrity, he does not lack fitness and propriety
and so it is disproportionate to impose a prohibition order on him and there can be no
justification for doing so. Further, Mr Staley’s successful record as CEO of Barclays
illustrates his competence and personal characteristics, including his integrity, and
demonstrates his fitness and propriety. His achievements as CEO also support the
conclusion that it is inherently unlikely that he would have conducted himself recklessly
with regard to the accuracy of information which was to be provided to the Authority.
92. The Authority considers that Mr Staley is not a fit and proper person to
perform the role of a CEO or other senior management function, and that it is
appropriate and proportionate to prohibit Mr Staley from performing any
senior management or senior influence function in relation to any regulated
activity carried on by an authorised person, exempt person or exempt
professional firm, for the reasons set out in paragraphs 6.27 to 6.33 of this
Notice. The Authority notes Mr Staley’s submissions regarding his record as
CEO but considers that the evidence supports its conclusion that he acted
recklessly and with a lack of integrity.
1.
ACTION
1.1.
For the reasons given in this Notice, the Authority has decided to:
James Staley has referred this Decision Notice to the
Upper Tribunal to determine: (a) in relation to the
FCA’s decision to impose a financial penalty, what (if
any) is the appropriate action for the FCA to take,
and remit the matter to the FCA with such directions
as the Tribunal considers appropriate; and (b) in
relation to the prohibition order, whether to dismiss
the reference or remit it to the FCA with a direction
to reconsider and reach a decision in accordance
with the findings of the Tribunal.
Therefore, the findings outlined in this Decision
Notice reflect the FCA’s belief as to what occurred
and how it considers the behaviour of James Staley
should be characterised. The proposed action
outlined in the Decision Notice will have no effect
pending the determination of the case by the
Tribunal. The Tribunal’s decision will be made public
on its website.
(1)
impose on Mr James Edward Staley a financial penalty of £1,812,800
pursuant to section 66 of the Act; and
(2)
make an order prohibiting Mr Staley from performing any senior
management or significant influence function in relation to any regulated
activity carried on by an authorised person, exempt person or exempt
professional firm pursuant to section 56 of the Act.
2.
SUMMARY OF REASONS
2.1.
Mr Staley was appointed CEO of Barclays on 1 December 2015. Mr Staley was
approved by the Authority and the PRA to perform the Senior Management Function
1 (Chief Executive) at Barclays from 7 March 2016 to 31 October 2021, the date
on which he left Barclays. The CEO has a crucial role in providing an example to all
staff at their firm. The CEO also needs to demonstrate sound judgement when
performing their role.
2.2.
As CEO of Barclays, Mr Staley was required to comply with the Code of Conduct,
including by acting with integrity (ICR 1), being open and cooperative with the
Authority, the PRA and other regulators (ICR 3) and by disclosing appropriately any
information of which the Authority or the PRA would reasonably expect notice
(SMCR 4).
2.3.
Mr Staley recklessly approved a letter sent by Barclays to the Authority on 8
October 2019 which contained two misleading statements, about the nature of his
relationship with Jeffrey Epstein and the point of their last contact. In doing so, Mr
Staley failed to comply with ICR 1, ICR 3 and SMCR 4.
2.4.
In 2008, Mr Epstein was convicted of procuring a minor for prostitution by a Florida
state court. Mr Epstein was sentenced to 18 months in prison for this offence. Mr
Staley was aware of this conviction at that time. Mr Epstein was arrested again in
July 2019 on federal charges relating to, among other things, the sex trafficking of
minors. The Authority makes no findings that Mr Staley saw, or was aware of, any
of Mr Epstein’s alleged crimes.
2.5.
On 15 August 2019, the Authority asked Barclays, in a telephone call between a
senior executive at the Authority and a member of Barclays’ board of directors, to
explain in writing what it had done to satisfy itself that there was no impropriety
with respect to the relationship between Mr Staley and Mr Epstein.
2.6.
On 8 October 2019, Barclays sent the Letter to the Authority. The first paragraph
of the Letter stated:
“I am writing to close the loop on your request for assurance that we have
informed ourselves and are comfortable in regard to any association of [Mr Staley]
or Barclays with [Mr Epstein]. I can now report that [Board Member B], [Senior
Executive A] and [Board Member A] have had separate conversations with [Mr
Staley] where he has described his interactions with Mr Epstein. [Mr Staley] has
confirmed to us that he did not have a close relationship with Mr Epstein, and he
is resolute that at no time did he see anything that would have suggested or
revealed any aspect of the conduct that has been the subject of recent allegations.
[Mr Staley’s] last contact with Mr Epstein was well before he joined Barclays in
2015.”
2.7.
The Letter was misleading in two respects, each of which was material.
2.8.
First, the Letter stated that “[Mr Staley] has confirmed to us that he did not have
a close relationship with Mr Epstein.” In the Authority’s view this statement was
misleading because it did not fairly and accurately reflect the following facts and
matters, all of which were known to Mr Staley at the time he approved the Letter:
(1)
Mr Staley confided in Mr Epstein on significant matters relating to Mr
Staley’s career. For example, Mr Staley disclosed to Mr Epstein details of
discussions he was having with Barclays that led to Mr Staley’s
appointment as CEO in October 2015. Notably, on 8 October 2015, Mr
Staley disclosed to Mr Epstein the fact of the decision made by the Board
Nominations Committee of Barclays Plc (the BNC) confirming its approval
of Mr Staley’s appointment, which was not in the public domain and which
Mr Staley understood was “very confidential”.
(2)
Between July 2008 and December 2012, Mr Epstein and Mr Staley
exchanged more than 1,100 emails. On several occasions Mr Staley
described the strength of their friendship, including describing Mr Epstein
as one of his “deepest” or “most cherished” friends and stating that he
had few friendships as “profound” as his with Mr Epstein. The emails also
suggest that they spoke often on the telephone, as well as meeting in
person. Mr Staley continued to communicate with Mr Epstein between
January 2013 and October 2015, exchanging almost 600 emails during
that period, including further emails from Mr Staley referring to the
strength of their friendship.
(3)
Mr Staley visited various of Mr Epstein’s properties, including Mr Epstein’s
island in the US Virgin Islands on three separate occasions (with the last
visit taking place in April 2015), in addition to two further visits to a
private marina owned by Mr Epstein nearby his island, and Mr Epstein’s
ranch in New Mexico. Mr Staley also visited Mr Epstein in Palm Beach,
Florida to join a celebratory birthday dinner for Mr Epstein, in addition to
more regular visits to Mr Epstein’s home in New York. The visits to Mr
Epstein’s properties in the US Virgin Islands and New Mexico were for no
obvious business or professional purpose. Mr Staley travelled to Florida
to visit Mr Epstein during his prison sentence whilst he was on work
release in January 2009, because he was a “loyal person” and “just to
show support” to Mr Epstein.
(4)
Mr Epstein provided advice and assistance, over several years, to an
individual connected to Mr Staley in connection with their career. In
August 2015, Mr Staley informed Mr Epstein that this advice had been
“the gift of great friendship”.
2.9.
Mr Staley subsequently informed the Authority that he considered that he and Mr
Epstein had a “professional, fairly close relationship”.
2.10.
In addition, the Letter stated that “[Mr Staley’s] last contact with Mr Epstein was
well before he joined Barclays in 2015”. This statement was incorrect and was also
misleading.
2.11.
Mr Staley and Mr Epstein were in contact via email until 25 October 2015: this was
three days before Mr Staley’s appointment as CEO of Barclays was announced, and
only shortly before 1 December 2015, being the date that Mr Staley formally started
in role. The matters discussed between Mr Staley and Mr Epstein up to and including
25 October 2015, relating to both Mr Staley’s potential appointment as CEO of
Barclays and press enquiries in connection with his likely appointment regarding
his relationship with Mr Epstein, were significant and of importance to Mr Staley.
2.12.
The Letter made clear that Mr Staley was the source of the information that led to
the two statements, and he must have known that neither statement was accurate.
Mr Staley failed to suggest changes to this language or to make corrections, despite
having been asked, by Senior Executive A, to review a draft of the Letter to ensure
that it was “fair and accurate” on 6 October 2019. In an email dated 7 October
2019 to which Mr Staley was copied, Senior Executive A also confirmed to Board
Member A that “[Mr Staley] has reviewed [the Letter] as well and is comfortable
with the language”. No material amendments were made to the wording of the
Letter after Mr Staley’s review.
2.13.
The Authority was entitled to rely on the contents of the Letter as being an accurate
characterisation by Barclays of the nature of the relationship between Mr Staley
and Mr Epstein and it relied on the assurance provided by Barclays and the factual
confirmations attributed to Mr Staley (among other things) in the Letter. The
Authority concluded in light of the Letter that no further enquiries needed to be
made of Barclays or Mr Staley. Had the Letter accurately described the nature of
the relationship between Mr Staley and Mr Epstein, or the point at which the two
last were in contact, the Authority would have been in a position at that stage to
have considered whether it needed to ask further questions of Mr Staley and seek
clarity on the nature and extent of the relationship.
2.14.
Mr Staley did not draft the Letter and earlier draft versions had included more detail
about the nature and extent of Mr Staley’s relationship with Mr Epstein. Mr Staley
described his relationship with Mr Epstein to various members of senior
management at Barclays, including in the context of the Authority’s enquiry. Mr
Staley, and others at Barclays, understood the Authority’s request, which resulted
in the Letter, as being primarily focussed on whether Mr Staley was aware of, or
had witnessed, any of the alleged criminal activities of Mr Epstein during the course
of their apparent relationship.
2.15.
This does not, however, excuse Mr Staley for failing to correct the two misleading
statements in the Letter:
(1)
Mr Staley was the only person who reviewed or discussed the contents of
the Letter prior to it being finalised, who was able to comment on the
accuracy of these two statements from his own personal knowledge.
Those individuals at Barclays with whom Mr Staley discussed the matter
had, as would have been obvious to Mr Staley at the time, no first-hand
knowledge of the facts relating to the nature of the relationship between
Mr Staley and Mr Epstein, nor of the frequency or extent of their contact.
(2)
By stating that “[Mr Staley] has confirmed to us that he did not have a
close relationship with Mr Epstein”, the Letter implied that there was a
distance between Mr Epstein and Mr Staley that did not accurately reflect
the true position.
(3)
No individual at Barclays was aware that Mr Staley and Mr Epstein had
discussed press enquiries regarding their relationship, in connection with
Mr Staley’s likely appointment as CEO of Barclays, up until 25 October
2015, or had any knowledge of the fact that Mr Staley had shared
confidential information with Mr Epstein about negotiations relating to his
impending appointment as CEO in October 2015 (including confidential
decisions taken by the Board Nominations Committee of Barclays and
Barclays plc on 8 October 2015). Mr Staley did not inform anybody at
Barclays of these matters, which were clearly relevant to factual
assertions that were included in the Letter.
2.16.
In fact, Mr Staley consistently did not accurately set out the nature and extent of
his relationship with Mr Epstein to Barclays. In particular:
(1)
In October 2015, in response to the press enquiries relating to Mr Staley’s
likely appointment as CEO, regarding his relationship with Mr Epstein,
Barclays made statements which gave the misleading impression that Mr
7
Staley and Mr Epstein did not have a close relationship, including that
they had not had a discussion about the recruitment process that year
and that they did not have “anything resembling a close personal
association”. The Authority considers that these statements were based
on information provided by Mr Staley and that, in light of his impending
appointment as CEO, Mr Staley had an interest in giving Barclays the
impression of a greater distance between himself and Mr Epstein than
was the case at this time.
(2)
In September 2019, Mr Staley gave a presentation to the governing board
of Academic Institution A, of which he was a member, to address
enquiries about his relationship with Mr Epstein. A set of talking points
(the Talking Points) were prepared to assist Mr Staley in making this
presentation and subsequently provided part of the factual foundation for
the Letter sent by Barclays to the Authority. The Talking Points were
misleading in various aspects, for example, they included the inaccurate
statements “At no time after his conviction in 2008 did I allow [Mr
Epstein] any connection with any aspect of my professional life” and “I
had limited contact with him post his conviction”. The Talking Points were
based on information provided by Mr Staley to Barclays.
2.17.
The Authority has concluded that Mr Staley was aware of the risk which his
association with Mr Epstein posed to his reputation and his career, and that this
knowledge is relevant context to Mr Staley’s failure in 2015, and subsequently in
2019, to set out accurately the nature and extent of his relationship with Mr Epstein
to Barclays, and his failure to correct the two misleading statements in the Letter.
2.18.
The role of CEO requires an individual to exercise sound judgement and set an
example to staff at their firm. Mr Staley disregarded information, that only he could
have known, about his relationship with Mr Epstein and which contradicted the two
misleading statements in the Letter. Mr Staley must have appreciated that the
Authority would rely on the content of the Letter and must have been aware there
was a risk that the Letter would mislead the Authority. Therefore, by approving the
Letter containing the two misleading statements, Mr Staley acted recklessly and
with a lack of integrity in breach of ICR 1.
2.19.
Mr Staley must have realised that the Authority’s request to Barclays for
information about his relationship with Mr Epstein was important to the Authority.
By approving the Letter which contained the two misleading statements, without
informing Barclays that the statements were incorrect, Mr Staley failed to be open
and cooperative with the Authority and failed to disclose appropriately information
of which the Authority would have reasonably expected notice. Consequently, Mr
Staley failed to comply with ICR 3 and SMCR 4.
2.20.
These breaches represented a very serious failure of judgement by Mr Staley and
involved a failure to act with integrity. Integrity, being open and cooperative with
the Authority at all times, and demonstrating good judgement are fundamental
requirements of senior managers, particularly a CEO of one of the UK’s most
significant financial institutions. The Authority expected Mr Staley, as CEO of
Barclays, to recognise the importance of acting with integrity in all of his
professional dealings and to recognise the importance of being open and
cooperative with the Authority at all times. A necessary feature of the effective
supervision of firms in the UK is for their senior managers to be open and frank in
their dealings with the Authority, the PRA and other regulators, particularly where
those interactions relate to sensitive or important matters.
2.21.
The Authority has also taken into account that Mr Staley was subject to regulatory
action by the Authority and the PRA in 2018, albeit relating to matters not
connected to the findings in this Notice. As a consequence of that action, the
Authority would have expected Mr Staley to have been particularly careful to ensure
that the Letter was factually accurate.
2.22.
The Authority therefore has decided to impose on Mr Staley a financial penalty of
£1,812,800 pursuant to section 66 of the Act for breaching ICR 1, ICR 3 and SMCR
4.
2.23.
Given the nature of the failings described in this Notice, it appears to the Authority
that Mr Staley is not a fit and proper person to perform the role of a CEO or any
other senior management function at an authorised person, exempt person or
exempt professional firm.
2.24.
The Authority therefore has also decided to make an order prohibiting Mr Staley
from performing any senior management or significant influence function in relation
to any regulated activity carried on by an authorised person, exempt person or
exempt professional firm pursuant to section 56 of the Act.
2.25.
This Notice refers to certain individuals and firms, in addition to Mr Staley. By
referring to these individuals and firms, the Authority does not seek to criticise their
actions, and does so only to provide relevant factual context to the findings in this
Notice.
3.
DEFINITIONS
3.1.
The definitions below are used in this Notice:
“Academic Institution A” means an academic institution that Mr Staley was on the
governing body of as at the date of the Letter;
The “Act” means the Financial Services and Markets Act 2000;
The “Authority” means the Financial Conduct Authority;
“Barclays” means Barclays Bank Plc, the entity authorised by the PRA and
regulated by the Authority and the PRA (with firm reference number 122702);
“BlueMountain” means BlueMountain Capital LLC;
“BNC” means the Board Nominations Committee of Barclays and Barclays Plc,
which oversaw the recruitment process for Barclays’ CEO in 2015;
“Board” means the board of directors for Barclays;
“Board Member A” means a member of the Board;
“Board Member B” means a second member of the Board;
“CEO” means Chief Executive Officer;
“Code of Conduct” means the Code of Conduct (COCON) in the Handbook;
“DEPP” means the Authority’s Decision Procedures and Penalties Manual, part of
the Handbook;
“FCA Executive A” means a senior executive at the Authority;
"Firm A” means the firm at which Mr Staley was a non-executive director from
May 2015 until 28 October 2015;
“Handbook” means the Authority’s Handbook of Rules and Guidance;
“ICR 1” means Individual Conduct Rule 1;
“ICR 2” means Individual Conduct Rule 2;
“ICR 3” means Individual Conduct Rule 3;
“JPM” means JP Morgan Chase;
“Law Firm A” means a law firm engaged by Barclays in connection with an
approach to Barclays by Newspaper A;
The “Letter” means the letter from Board Member A to the Authority dated 8
October 2019;
“Newspaper A” means a national newspaper;
“PRA” means the Prudential Regulation Authority;
“RDC” means the Regulatory Decisions Committee of the Authority (see further
under Procedural Matters below);
“Senior Executive A” means a senior executive at Barclays;
“Senior Executive B” means a second senior executive at Barclays;
“Senior Executive C” means a third senior executive at Barclays;
“SMCR 4” means Senior Manager Conduct Rule 4;
The “Tribunal” means the Upper Tribunal (Tax and Chancery Chamber);
The “Talking Points” means the document titled ‘[Academic Institution A] Talking
Points; Draft 11.09.19’, a set of talking points prepared to assist Mr Staley when
providing a description of his relationship with Mr Epstein to Academic Institution
A on 13 September 2019; and
The “Warning Notice” means the warning notice given to Mr Staley dated 3
November 2022.
4.
FACTS AND MATTERS
The role and expectations of the CEO
4.1.
The CEO is the most senior executive director on a board of directors. The CEO
therefore has a crucial role in providing an example to all staff at their firm. The
CEO must at all times act with integrity and be open and cooperative with the
Authority, the PRA and other regulators. The CEO is also required to disclose
appropriately any information of which the Authority or the PRA would reasonably
expect notice.
4.2.
The Code of Conduct requires those who are subject to it to meet certain standards
in discharging their roles and functions under the regulatory system, with high
standards expected of senior personnel. It is particularly important that a CEO
should act with integrity and demonstrate sound judgement, including when
considering disclosure of information to the Authority or the PRA, and set an
example to others of the importance of being open and cooperative with the
Authority, the PRA and other regulators.
4.3.
Mr Staley was appointed CEO of Barclays on 1 December 2015. From 1 December
2015 to 6 March 2016, Mr Staley was approved by the PRA with consent from the
Authority to perform Controlled Function 1 (Director), Controlled Function 3 (Chief
Executive) and Controlled Function 29 (Significant management) for Barclays. Mr
Staley was approved by the Authority and the PRA to perform Senior Management
Function 1 (Chief Executive) for Barclays from 7 March 2016 to 31 October 2021,
the date on which he left Barclays.
4.4.
On 11 May 2018, Mr Staley was subject to disciplinary action by the Authority and
the PRA for breaching ICR 2 in the way he acted in response to an anonymous
letter that Barclays received which raised concerns about its hiring process. This
resulted in a total financial penalty of £642,400 being imposed on Mr Staley, split
equally between two separate Final Notices issued by the Authority and the PRA.
4.5.
In 2008, Mr Epstein was convicted in the USA of procuring a minor for prostitution
by a Florida state court. Mr Epstein was sentenced to 18 months in prison for this
offence. Mr Staley was aware of this conviction at that time. Mr Epstein was
arrested again in July 2019 on federal charges relating to, among other things, the
sex trafficking of minors. On 10 August 2019, Mr Epstein died whilst in prison. The
Authority makes no findings that Mr Staley saw, or was aware of, any of Mr
Epstein’s alleged crimes.
The Letter
4.6.
On 15 August 2019, following a number of press reports, the Authority asked
Barclays, in a telephone call between FCA Executive A and Board Member A, to
explain in writing what it had done to satisfy itself that there was no impropriety
with respect to the relationship between Mr Staley and Mr Epstein.
4.7.
On 8 October 2019, Barclays sent the Letter to the Authority. The Letter included
the following statements:
“[Mr Staley] has confirmed to us that he did not have a close relationship with Mr
Epstein” and “[Mr Staley’s] last contact with Mr Epstein was well before he joined
Barclays in 2015.”
Mr Staley’s relationship with Mr Epstein (1999 to July 2015)
4.8.
Mr Staley’s relationship with Mr Epstein began in 1999 or 2000, at a time when Mr
Staley was the Head of JPM’s Private Bank and Mr Epstein was a client of JPM’s
Private Bank. Their relationship continued when Mr Staley left JPM and joined
BlueMountain in 2013. The evidence relating to the nature and extent of their
relationship between 1999 and July 2015 is set out at Annex B.
Mr Staley’s relationship with Mr Epstein (July 2015 to October 2015)
Mr Staley’s recruitment and appointment as CEO of Barclays
4.9.
Between July 2015 and October 2015, Mr Staley and Mr Epstein discussed the
approach by Barclays to Mr Staley in connection with his eventual appointment as
CEO. Email correspondence between Mr Staley and Mr Epstein from this time
suggests that Mr Staley and Mr Epstein also spoke over the phone about this
matter.
4.10.
The recruitment of Mr Staley in 2015 was managed by the BNC. On 11 July 2015,
Mr Staley informed Mr Epstein in an email titled “B” that, “A member of the board
just reached out.” Later on the same day, Mr Staley forwarded to Mr Epstein an
email he had received from a member of the BNC, commenting “Here we go”.
Following this email, there were further emails between Mr Staley and Mr Epstein
about the matter:
(1)
On 11 July 2015, Mr Epstein asked Mr Staley whether he had been
provided with further information from a recruiter. Mr Staley then sent
an email to Mr Epstein that briefly summarised discussions Mr Staley had
had with another recruiter about what Barclays had told that recruiter as
to its expectations for the recruitment process.
(2)
On 20 July 2015, in an email titled “B”, Mr Staley informed Mr Epstein
that a senior member of the Board wanted to meet him (Mr Staley). Mr
Epstein and Mr Staley then appear to have spoken on the following day.
(3)
At a meeting on 23 July 2015, the BNC agreed to appoint an executive
search firm to undertake the search for a new CEO and reviewed the role
requirements for the new CEO. Mr Staley appears to have been aware of
this, and informed Mr Epstein of it on the same day, noting that “It
begins”.
(4)
On 24 July 2015, Mr Epstein informed Mr Staley by email that, “better if
you not email me. phone only”. Subsequently, Mr Staley sent blank
emails to Mr Epstein on 21 August 2015 and 4 September 2015 with
respective subject headings “Call my cell” and “Call me”.
4.11.
At a meeting on 5 August 2015, the BNC reviewed a list of candidates and identified
four primary prospective candidates, one of which was Mr Staley. The BNC agreed
that contact would be made with the candidates and interviews arranged.
4.12.
At a meeting on 11 September 2015, the BNC discussed the CEO candidates and
agreed to progress discussions with Mr Staley.
4.13.
There was no written agreement between Barclays and Mr Staley which set out that
the negotiations relating to his potential appointment ought to remain confidential.
However, it is apparent from an email that he sent to a senior member of the Board
on 18 September 2015, regarding a conversation he had had with a board member
of Firm A about this matter, that Mr Staley understood that he needed to keep
discussions relating to his potential appointment “very confidential”. Mr Staley
informed the Authority in interview that, in his view, this did not preclude him from
“seeking counsel” from a “couple of people” about the discussions with Barclays.
4.14.
On 4 October 2015, Mr Staley wrote to Mr Epstein, in an email titled “Friendship”,
stating: “You never wavered in our friendship these last three years. That means a
lot too [sic] me. […] Cross your toes!!!”.
4.15.
At a meeting on 8 October 2015, the BNC discussed Mr Staley as a candidate and
unanimously resolved to recommend his appointment as CEO to the board of
directors of Barclays Plc for approval. At a meeting on 8 October 2015, the Board
Remuneration Committee of Barclays Plc approved the proposed compensation
arrangements for Mr Staley.
4.16.
On 8 October 2015, Mr Staley sent an email to Mr Epstein relaying that the BNC
had approved his appointment:
“Nominating com approved. Friday, full board votes. I should have the contract
by the weekend. We’re very close.”
4.17.
Mr Staley informed the Authority that Mr Epstein did not have a “formal or informal
advisory role” in relation to the appointment, and that he was discussing this with
Mr Epstein on the basis that he had previously discussed with Mr Epstein matters
relating to his career and wanted to hear Mr Epstein’s “thoughts” on the matter and
because he “trusted him to be discreet”. Mr Staley’s discussions with Mr Epstein
relating to his potential appointment as CEO reflect the fact that, at the time, Mr
Staley felt able to confide in Mr Epstein in relation to this very significant matter
regarding his career.
4.18.
On 9 October 2015, the Board and the board of directors of Barclays Plc met and
approved, in principle, the appointment of Mr Staley as CEO subject to regulatory
approval and final confirmation of the appointment by the Chairman.
4.19.
On 10 October 2015, Mr Staley informed Barclays that BlueMountain may contact
Barclays “regarding restricting [BlueMountain] from trading in Barclays”, owing to
the knowledge that BlueMountain may have (given that Mr Staley was Managing
Partner of BlueMountain) of Mr Staley’s impending appointment as CEO of Barclays.
4.20.
Mr Staley’s likely appointment as CEO was first reported in the Financial Times on
12 October 2015, prior to the formal announcement by Barclays, and there was
extensive press coverage of Mr Staley’s likely appointment on 13 and 14 October
2015. Mr Staley noted this in an email to Mr Epstein dated 15 October 2015, which
stated: “The press is all over me. Trying to lie low. Sorry.” Mr Staley’s appointment
was subsequently announced by Barclays on 28 October 2015.
Press enquiries at the time of Mr Staley’s appointment – October / November 2015
Newspaper A’s article dated 25 October 2015
4.21.
Following press speculation about Mr Staley’s impending appointment as CEO of
Barclays, Mr Staley, Barclays and Mr Epstein were each approached by Newspaper
A about an article, which was ultimately published on 25 October 2015. Barclays
appears to have been first contacted about the potential article on 24 October 2015.
4.22.
Mr Staley and Mr Epstein discussed this approach from Newspaper A between 16
October 2015 and 25 October 2015:
(1)
On 16 October 2015, Mr Epstein forwarded to Mr Staley an email he
received from a journalist at Newspaper A, who wanted to talk to Mr
Epstein in connection with Mr Staley’s likely appointment as CEO of
Barclays.
(2)
On 17 October 2015, Mr Epstein and Mr Staley exchanged emails about
a previous meeting at Mr Epstein’s home in New York, and during this
exchange, Mr Staley emailed Mr Epstein to note “Don’t worry. We will be
fine.”
(3)
Later that day, Mr Epstein wrote to Mr Staley stating, “I’m on the plane
land in two hours”. Mr Staley responded, “Ok. I’m going to play is [sic]
simple. I’ve known you as a client. I will tell B tomorrow. […] Let me know
if they say something else. But stay away from them. I’m fine.” Mr Staley
informed the Authority that this email reflected what he was planning to
say to Newspaper A if asked, rather than what he was planning to say to
Barclays. Mr Staley also suggested that it was possible that the reference
to “B” might be to BlueMountain, rather than to Barclays.
(4)
Later on 17 October 2015, Mr Staley emailed Mr Epstein to ask “Anything
new?”, to which Mr Epstein responded “no, zero. […]”.
(5)
On 22 October 2015, Mr Epstein forwarded on an email to Mr Staley
showing that the journalist from Newspaper A had called him again. Mr
Epstein forwarded on another email from the journalist to Mr Staley on
24 October 2015.
4.23.
On 24 October 2015, the journalist from Newspaper A contacted Barclays in relation
to the article, explaining that it would contain allegations that Mr Epstein sought to
influence the selection of Mr Staley as CEO of Barclays, both during the process
that had taken place in 2015, and also during an earlier process in 2012. The
Authority has not seen evidence to suggest that Mr Epstein did, in fact, seek to
influence either appointment process.
4.24.
On 24 October 2015, Barclays engaged Law Firm A in connection with the matter,
and Law Firm A, acting for Barclays, wrote a letter to Newspaper A that day. Senior
Executive B was responsible for coordinating Barclays’ response to the proposed
article. On 24 October 2015, Senior Executive B spoke to Mr Staley and asked him
about his relationship with Mr Epstein. Mr Staley informed Senior Executive B that
he knew Mr Epstein and that they had a professional relationship that had arisen
due to Mr Epstein being a client of JPM’s Private Bank when Mr Staley worked at
JPM. In relation to the allegations raised by Newspaper A, Mr Staley informed
Senior Executive B that he may have spoken with Mr Epstein about the earlier
recruitment process in 2012. Senior Executive B informed the Authority that they
recalled, however, that Mr Staley informed them that he had had no discussions
with Mr Epstein about the recruitment process in 2015.
4.25.
On 24 October 2015, a member of staff at Barclays informed Law Firm A that “given
we’re likely to end up with an article even if it focuses on 2012, your letter should
major on quashing the notion that the two are close…and certainly for 2015 that
there has been no collaboration…”. This instruction was brought to Mr Staley’s
attention. Senior Executive B told Mr Staley that they needed to keep the article
“historical and flimsy” and asked Mr Staley if he was comfortable with a statement
being provided to Newspaper A that, “At no time has Mr Staley asked Mr Epstein to
make representations on his behalf regarding his role.” Mr Staley confirmed he was
content with Barclays making that statement.
4.26.
Mr Staley was provided with a draft of the letter to be sent from Law Firm A to
Newspaper A on 24 October 2015. The draft letter stated, among other things,
that “Mr Staley has informed [Barclays] that he is at best an acquaintance of [Mr
Epstein]. They are certainly not close friends as your allegations might imply …”.
Mr Staley suggested to Senior Executive B that the reference to “he is at best an
acquaintance of [Mr Epstein]” should be removed and that the wording should be
changed to “Mr Staley has informed [Barclays] that while he knows Mr Epstein from
his time at [JPM], they are certainly not close friends as your allegations might
imply.” However, when Mr Staley was informed by Senior Executive B that Law
Firm A had sent the letter, due to timing pressures prior to publication of the article,
and that the letter retained reference to the fact that Mr Epstein was “at best an
acquaintance” of Mr Staley’s, Mr Staley responded by stating “no worries”. Mr
Staley told the Authority that he had requested the change because he thought the
use of the word “acquaintance” was “too light”.
4.27.
Mr Staley also did not correct an inaccurate statement in the letter that “Further,
Mr Staley confirms that he has had no contact with Mr Epstein nor discussion of
this matter this year”. This statement had not been included in the draft letter
provided to Mr Staley and had subsequently been inserted following an email from
Senior Executive B to Law Firm A stating that the letter needed to say, “There has
been no contact between Jes Staley or [sic] Jeffrey Epstein, or discussion of this
matter this year”. Mr Staley does not appear to have seen this statement, for which
he is stated to be the source, until after the letter was sent, but there is also no
evidence that Mr Staley subsequently clarified the position, despite the statement
being untrue. In interview, Mr Staley said that this statement was not consistent
with his recollection of his conversations with Senior Executive B, disputed
informing Senior Executive B or anyone else at Barclays that he had had no contact
with Mr Epstein in 2015, and said that his focus during his discussions with Senior
Executive B was on confirming that he did not ask Mr Epstein to lobby on his behalf
in 2012 or 2015. Senior Executive B informed the Authority in interview that they
had the impression from their discussions with Mr Staley, that Mr Staley had been
in contact with Mr Epstein in 2015 and that contact had continued until reasonably
recently. However, as mentioned at paragraph 4.24 above, Senior Executive B also
recalled that Mr Staley informed them that he had had no discussions with Mr
Epstein about the recruitment process in 2015.
4.28.
In the circumstances, the Authority concludes that Mr Staley did inform Senior
Executive B on or around 24 October 2015 that he had had no discussions with Mr
Epstein in connection with the recruitment process in 2015. Prior to 24 October
2015, Senior Executive B knew nothing of the relationship between Mr Staley and
Mr Epstein, and information that they provided to Law Firm A in respect of the
relationship on 24 October 2015 was based on information that they had received
from Mr Staley. In addition, Mr Staley must have known that the inclusion of this
sentence in the letter was inaccurate, particularly in view of ongoing
correspondence he was exchanging with Mr Epstein at the time.
4.29.
On 25 October 2015, the article was published. Senior Executive B shared a copy
of the article by email with senior individuals at Barclays and, separately, with Mr
Staley. Mr Staley then forwarded this email, attaching the article, to Mr Epstein.
4.30.
There were subsequent press articles on this matter between 25 October 2015 and
1 November 2015. On 29 October 2015, Law Firm A explained to Barclays, having
considered a more detailed briefing of historical press coverage relating to Mr
Epstein, that Barclays ought to “…be as strong as we possibly can be in dispelling
the friendship myth. If there is any more information that we can deploy to
demonstrate distance between them it would be helpful…”. Prior to an article
published on 1 November 2015 by Newspaper A, the Barclays’ Corporate
Communications team received further queries from the journalist regarding Mr
Staley’s relationship with Mr Epstein, to which Barclays responded, noting that
“neither Barclays nor Mr Staley feel the need to respond to your two questions
given that there is no obligation to distance ourselves from someone with whom
neither party has anything resembling a close personal association.” Mr Staley was
not copied into this email and there is no evidence that he saw or approved the
wording. However, the Authority considers that, insofar as Barclays was purporting
to convey Mr Staley’s position to the journalist, this was based on what Mr Staley
had previously told Senior Executive B.
4.31. The Authority recognises that the communications sent by or on behalf of Barclays
to Newspaper A prior to the publication of the articles on 25 October 2015 and 1
November 2015 were in the context of a response from Barclays and Mr Staley to
a journalist. However, in the Authority’s view these communications show that Mr
Staley did not accurately convey the nature of his relationship with Mr Epstein to
Barclays. Mr Staley had informed Mr Epstein three weeks before that he had “never
wavered in our friendship these last three years. That means a lot too [sic] me.
[…]” (to which Mr Epstein responded “more than 10 years”) and had communicated
to Mr Epstein details of confidential decisions made by the BNC relating to Mr
Staley’s appointment (see paragraph 4.17). The Authority considers that, in light
of his impending appointment as CEO, Mr Staley had an interest in giving Barclays
the impression of a greater distance between himself and Mr Epstein than was the
case at this time.
4.32.
Mr Staley explained to the Authority that, around the time of the article in
Newspaper A, Senior Executive B had advised Mr Staley that he should not have
any contact with Mr Epstein going forward. Senior Executive B also recalled giving
this advice to Mr Staley. So far as the Authority is aware, Mr Staley had no further
contact with Mr Epstein after 25 October 2015.
Developments following Mr Epstein’s arrest – from July 2019
6 July 2019 to 8 October 2019 – media reports
4.33.
Mr Epstein was arrested on 6 July 2019. From around 17 July 2019, Barclays
received a number of press enquiries requesting comment on articles that included
reference to Mr Staley’s apparent relationship with Mr Epstein. From this point, Mr
Staley was involved in discussions with several individuals at Barclays, including
Board Member A, Senior Executive A and Senior Executive B, in relation to Barclays’
response to these press articles.
4.34.
The press articles that were then published from around 22 July 2019 until 8
October 2019 relating to Mr Staley’s relationship with Mr Epstein included details
of (among other things):
(1)
Mr Staley’s visit in January 2009 to Mr Epstein whilst Mr Epstein was on
work release during his prison sentence (see paragraph 1.18 of Annex
B);
(2)
A large transaction that Mr Epstein was alleged to have introduced to JPM
(via Mr Staley) (see paragraph 1.3 of Annex B); and
(3)
Mr Staley’s visit to Mr Epstein’s island in the US Virgin Islands in April
2015 (see paragraph 1.33.2 of Annex B).
4.35.
Mr Staley discussed his relationship with Mr Epstein with various individuals at
Barclays, including Board Member A, Senior Executive A, Board Member B and
Senior Executive B. During these discussions, Mr Staley explained that:
(1)
he had been introduced to Mr Epstein whilst in his former role as Head of
the Private Bank at JPM, in around 1999 or 2000;
(2)
he had been on Mr Epstein’s private plane, along with members of his
family, once;
(3)
his contact with Mr Epstein had spanned the time that Mr Epstein was
serving his custodial sentence following his 2008 conviction;
(4)
Mr Epstein had provided advice and assistance to an individual connected
to Mr Staley in relation to an application relating to their career;
(5)
he and Mr Epstein were professionally fairly close, particularly as Mr
Epstein had a propensity to introduce business to JPM, and that, whilst
their relationship was predicated on business, they were on good terms;
(6)
he and Mr Epstein had not had any contact since Mr Staley had joined
Barclays; and
(7)
nothing that Mr Staley saw whilst in Mr Epstein’s company had given him
any indication about the fact that Mr Epstein had been committing the
crimes that were the subject of allegations from July 2019.
August 2019 to September 2019 – Academic Institution A
4.36.
As at the date of the Letter, Mr Staley was on the governing board of Academic
Institution A and actively supported Academic Institution A. In August 2019,
Academic Institution A made enquiries to Mr Staley about his relationship with Mr
Epstein. Mr Staley offered to speak with the governing board of Academic
Institution A to address those and any related enquiries about his relationship with
Mr Epstein. Consequently, on 13 September 2019, Mr Staley made an oral
presentation to the governing board of Academic Institution A.
4.37.
The Talking Points were prepared to assist Mr Staley to make this presentation.
Senior Executive A, Senior Executive B and Senior Executive C each assisted in
preparing the Talking Points and had discussions regarding their content with Mr
Staley, and Board Member A recalled being read the Talking Points or the key
points.
4.38.
The Talking Points included the statements that, “At no time after his conviction in
2008 did I allow [Mr Epstein] any connection with any aspect of my professional
life” and that, “I had limited contact with him post his conviction”. These sentences
were inaccurate, in view of the significant number of interactions between Mr
Epstein and Mr Staley relating to Mr Staley’s career and the firms that he worked
for (as described in Annex B and in paragraphs 4.9 to 4.32 above). The Talking
Points also stated that, “At no time during my tenure at [BlueMountain] did I
conduct any business with [Mr Epstein]”. Although the Authority has not seen any
evidence that Mr Staley did, in fact, conduct any business with Mr Epstein whilst he
was at BlueMountain, given that Mr Staley sought to onboard Mr Epstein as a client
of BlueMountain in February and March 2013 (see paragraphs 1.21 to 1.23 of Annex
B), and in view of the fact that Mr Epstein made certain introductions to possible
business contacts for Mr Staley when Mr Staley was at BlueMountain (see
paragraph 1.24 of Annex B), the Authority considers this statement to be potentially
misleading. The Talking Points also stated that, besides attending roughly one
dinner per year hosted by Mr Epstein after his conviction, most often with multiple
guests, “I have only ever been at a social gathering with him once” and that “I have
visited his island twice”: these statements were also misleading, in view of the
evidence regarding the nature of Mr Staley’s relationship with Mr Epstein as set out
in Annex B.
4.39.
A handwritten note taken by Senior Executive C from the meeting between Mr
Staley and members of the governing body of Academic Institution A suggests that,
in response to a question about why he continued to have a relationship with Mr
Epstein following Mr Epstein’s conviction in 2008, Mr Staley stated that “it was a
personal relationship”, he “didn’t socialise with him” and he “was wary and
cautious”. Again, these latter two statements were not accurate.
The Authority’s enquiry - 15 August 2019 to 8 October 2019
The Authority’s initial contact
4.40.
On 14 August 2019, the Authority contacted Barclays by telephone seeking to speak
urgently to Board Member A. On 15 August 2019, FCA Executive A had a telephone
call with Board Member A who was on vacation at the time. On 16 August 2019,
FCA Executive A asked their assistant to record the following note of the call: “[…]
[Board Member A] advised that when the press comments had first emerged [Mr
Staley] came to speak with [Board Member A] and stated that there wasn’t any
particular relationship between him and [Mr Epstein]. [Board Member A] advised
[they] felt satisfied by that. [FCA Executive A] advised that the [Authority’s]
perception is that media reports had intensified around their relationship and asked
[Board Member A] to consider these. [FCA Executive A] further asked [Board
Member A] to write to the [Authority] setting out how they had satisfied themselves
there was no impropriety to the relationship.”
4.41.
After his return from vacation, Board Member A informed Mr Staley of the
Authority’s request during a meeting on or around 23 August 2019. Board Member
A discussed the matter with Mr Staley, and informed Mr Staley that he ought to
speak with Senior Executive A to formulate a response to the Authority’s request.
During this conversation, Mr Staley reiterated to Board Member A that he had no
knowledge of Mr Epstein’s alleged criminal activities following his earlier conviction
in 2008, that he had had no contact with Mr Epstein since becoming CEO of Barclays
and that he was not aware of Mr Epstein having any relationship with Barclays.
Process for drafting the letter of response
4.42.
The Talking Points were used as the basis for preparing a draft response to the
Authority. Mr Staley discussed, on several occasions, the information that Barclays
might require in order to prepare a draft response to the Authority with Board
Member A, Senior Executive A, Senior Executive B and Senior Executive C. During
these discussions, different versions of a draft letter, which had been prepared by
Senior Executive A, were discussed, including a longer version containing more
details about Mr Staley’s relationship with Mr Epstein and some of their interactions.
Mr Staley reviewed this longer version of the letter and was content with it, subject
to it being reviewed again by others.
4.43.
This draft version of the letter was in the form of a letter from Mr Staley to Barclays,
with the initial intention that Barclays would then send this letter on to the
Authority. In late September 2019, Barclays and Mr Staley agreed that the letter
to the Authority should be shorter and instead be from Barclays to the Authority
(rather than from Mr Staley).
4.44.
On 2 October 2019, Board Member A asked Board Member B to speak to Mr Staley
about the matter so that another individual at Barclays could consider the steps
that Barclays was taking to respond to the Authority’s request. Board Member A
also asked Board Member B to consider whether the Board should be briefed on the
issue.
4.45.
Board Member B then spoke with Mr Staley about the matter on 4 October 2019.
During this conversation, Mr Staley informed Board Member B that:
(1)
Since being offered the CEO role at Barclays, he had not had contact with
Mr Epstein;
(2)
Mr Epstein had no relationship with Barclays;
(3)
Mr Staley first met Mr Epstein in 1999/2000;
(4)
When they met, they generally met in Mr Epstein’s office;
(5)
Mr Epstein did little of significance with JPM, but did provide an important
introduction to a hedge fund that JPM acquired, and over a 12-month
period helped negotiate the deal;
(6)
Mr Staley visited Mr Epstein in 2008 when Mr Epstein was on work release
from prison;
(7)
Mr Staley would see Mr Epstein every two months, and would have a
dinner once a year with Mr Epstein at his house;
(8)
BlueMountain did no business with Mr Epstein;
(9)
Mr Staley did see Mr Epstein once when Mr Staley had anchored his boat
off Mr Epstein’s island in the US Virgin Islands;
(10)
Mr Staley had never been interviewed by any authorities in connection to
his relationship with Mr Epstein;
(11)
Mr Staley asked himself how he could have missed what had since
emerged about Mr Epstein’s conduct, but noted that others who
networked with Mr Epstein missed it too, and concluded that Mr Epstein
led two completely distinct lives;
(12)
Mr Epstein’s stature came from his significant network of connections;
and
(13)
There were no pertinent facts about Mr Staley’s relationship with Mr
Epstein that were not in the public domain, other than the fact that Mr
Staley once flew on Mr Epstein’s private plane with members of his family.
4.46.
Board Member B then informed Board Member A that there appeared to have been
no relationship between Barclays and Mr Epstein and nothing from Mr Staley’s
explanation to suggest that this was something that ought to be escalated to the
Board.
4 October 2019 telephone call
4.47.
On 4 October 2019, Board Member A had a telephone call with FCA Executive A
and read the content of the shorter version of the draft letter to FCA Executive A.
Prior to this call, the draft letter included language referring to the meetings
between Mr Epstein and Mr Staley since Mr Epstein’s release from prison in 2009
as being “occasional”.
4.48.
During this call, Board Member A understood that the Authority was most
concerned to understand whether Mr Staley could have been involved in, or
otherwise aware of, Mr Epstein’s alleged criminal conduct. Board Member A then
spoke with Senior Executive A and, separately, with Mr Staley about their
conversation with FCA Executive A. Senior Executive A informed the Authority in
interview that Board Member A had told them that FCA Executive A had raised the
question of whether or not Mr Staley had a close relationship with Mr Epstein.
4.49.
As a consequence of this call, further changes were made to the draft letter to the
Authority, including removing the reference to the “occasional” nature of Mr Staley
and Mr Epstein’s meetings, and introducing a statement that Mr Staley had
confirmed that he did not have a “close relationship” with Mr Epstein. On 5 October
2019, Board Member A suggested to Senior Executive A that, with respect to the
aspect of the Letter that addressed the recency of Mr Staley’s last contact with Mr
Epstein, the draft could state that their last contact was “a long time before” Mr
Staley joined Barclays; in response, Senior Executive A suggested that, based on
his understanding of their last meeting, the Letter should state that their last
contact was “well before” Mr Staley joined Barclays.
4.50.
Senior Executive A made these changes and shared a draft version of the Letter
with Board Member A. On 6 October 2019, Senior Executive A asked Mr Staley to
review the draft letter, stating:
“Jes, Please have a look at the attached draft letter. It is only slightly revised from
the draft I showed you last week, but we want to be sure you feel that the
language is fair and accurate. Based on a discussion between [Board Member A]
and [the Authority] on Friday, we think it will meet the [Authority’s] needs. If you
have any questions or suggested edits please let us know…”
4.51.
Mr Staley questioned the change in wording to include “close relationship” and
discussed with Senior Executive A whether it was accurately expressed. He did not
question the statement that his and Mr Epstein’s last contact was “well before” he
joined Barclays. Senior Executive A informed Mr Staley that, based on what Mr
Staley had told them about his relationship with Mr Epstein to that point, they
considered that the letter as drafted was fair, but that Mr Staley would also need
to satisfy himself of this. Mr Staley confirmed that he had reviewed the letter and
was comfortable with it.
The Letter
4.52.
On 8 October 2019, Barclays sent the Letter to the Authority. The Letter stated:
“I am writing to close the loop on your request for assurance that we have
informed ourselves and are comfortable in regard to any association of [Mr Staley]
or Barclays with [Mr Epstein]. I can now report that [Board Member B], [Senior
Executive A] and [Board Member A] have had separate conversations with [Mr
Staley] where he has described his interactions with Mr Epstein. [Mr Staley] has
confirmed to us that he did not have a close relationship with Mr Epstein, and he
is resolute that at no time did he see anything that would have suggested or
revealed any aspect of the conduct that has been the subject of recent allegations.
[Mr Staley’s] last contact with Mr Epstein was well before he joined Barclays in
2015.
Separately, Barclays’ Financial Crime team has conducted a thorough review of
our records, which did not reveal any client or customer relationship with Mr
Epstein.
In sum, neither our discussions with [Mr Staley] nor our review of the bank’s
records have revealed any cause to suspect that Barclays or [Mr Staley] have
played any role in the activities of Mr Epstein that have been under investigation.
I trust this addresses your questions.”
4.53.
The wording of the Letter was identical to the 6 October 2019 draft version reviewed
by Mr Staley, except for a minor change to the end of the third paragraph which
had previously referred to activities of Mr Epstein that “are under investigation”.
The statement regarding the nature of Mr Staley’s relationship with Mr Epstein
4.54.
The Letter stated that “[Mr Staley] has confirmed to us that he did not have a close
relationship with Mr Epstein”.
4.55.
Board Member A, Senior Executive A and Mr Staley each understood that the
Authority was primarily interested in understanding whether or not Mr Staley had
been in any way involved in, or aware of, Mr Epstein’s alleged crimes. Board
Member A has subsequently informed the Authority that they considered that Mr
Staley had been “entirely consistent” with them in relation to the matters involving
Mr Epstein.
4.56.
Mr Staley informed the Authority that he understood that he was being asked to
confirm that he did not have a “close relationship” with Mr Epstein such that he
could have known or otherwise been involved in any of Mr Epstein’s alleged crimes.
Mr Staley considered that, while he had a “professional, fairly close relationship”
with Mr Epstein, he definitely did not have a “close relationship” with Mr Epstein in
that context, and that he was not personally close to Mr Epstein in any event.
4.57.
Senior Executive A informed the Authority that they would have expected to have
been told about certain interactions between Mr Staley and Mr Epstein, including
those relating to Mr Staley’s visit to Mr Epstein’s ranch (see paragraph 1.19.2 of
Annex B) and Mr Staley’s apparent invitation to Mr Epstein to attend an academic
ceremony for an individual connected to Mr Staley in 2015 (see paragraph 1.26 of
Annex B), and that had they known of these matters they would have asked further
questions and taken any answers into account when drafting the Letter. Senior
Executive A, having subsequently been shown certain email communications
between Mr Staley and Mr Epstein, considered that, albeit taken in isolation, certain
of those communications appeared to show a relationship that did not align with
the way it had been characterised in the Letter.
4.58.
The Authority’s view is that, having regard to the evidence set out at Annex B and
in paragraphs 4.9 to 4.32 above, including the following facts and matters, the
assertion that Mr Staley “did not have a close relationship with Mr Epstein” was
inaccurate and, consequently, misleading:
(1)
Mr Staley himself informed the Authority during the course of its
investigation that he considered that he and Mr Epstein were
“professionally fairly close” or had a “professional, fairly close
relationship”.
(2)
Email communications from Mr Staley to Mr Epstein refer to the strength
of their friendship, and Mr Staley described Mr Epstein as one of his
“deepest” or “most cherished” friends and stated that he had few
friendships as “profound” as his with Mr Epstein. Mr Staley subsequently
informed the Authority that these communications reflected the way he
writes to business contacts and that, whilst he was grateful to Mr Epstein
for his assistance on certain matters, he may have been “gaming the
relationship” by conveying to Mr Epstein that they were closer than, in Mr
Staley’s view, they actually were. In interview, Board Member A agreed
that Mr Staley regularly used affectionate language in his email
correspondence. The Authority’s view is that, whilst Mr Staley may use
a warm tone to communicate with business contacts, his communications
with Mr Epstein were different in tone and nature and strongly suggest
that the relationship between Mr Staley and Mr Epstein was in any case
objectively close.
(3)
Mr Staley travelled to Florida to visit Mr Epstein during his prison sentence
whilst he was on work release in January 2009. He did this due to being
a “loyal person” and “just to show support” to Mr Epstein.
(4)
Mr Staley visited various of Mr Epstein’s properties, including Mr Epstein’s
island in the US Virgin Islands on three separate occasions, in addition to
two further visits to a private marina owned by Mr Epstein nearby his
island, and Mr Epstein’s ranch in New Mexico. The visits to Mr Epstein’s
properties in the US Virgin Islands and New Mexico were for no obvious
business or professional purpose. Mr Staley also visited Mr Epstein in
Palm Beach, Florida to join a celebratory birthday dinner for Mr Epstein,
in addition to more regular visits to Mr Epstein’s home in New York.
(5)
Mr Epstein provided advice and assistance, over several years, to an
individual connected to Mr Staley in connection with their career. In
August 2015, Mr Staley informed Mr Epstein that this advice had been
“the gift of great friendship”.
(6)
Mr Staley confided with Mr Epstein on significant matters relating to Mr
Staley’s career. For example, Mr Staley disclosed to Mr Epstein details of
discussions Mr Staley was having with Barclays that led to his
appointment as CEO in October 2015, having previously discussed
possible appointments to senior positions whilst at, and following his
departure from, JPM. Notably, on 8 October 2015, Mr Staley disclosed to
Mr Epstein the fact of the decision made by the BNC confirming its
approval of Mr Staley’s appointment, which was not in the public domain
and which Mr Staley understood was “very confidential”.
The statement: “[Mr Staley’s] last contact with Mr Epstein was well before he joined
Barclays in 2015”
4.59.
The Letter also stated that “[Mr Staley’s] last contact with Mr Epstein was well
before he joined Barclays in 2015.”
4.60.
Neither Board Member A nor Senior Executive A was aware that Mr Staley was
exchanging emails and speaking on the phone with Mr Epstein in relation to his
prospective appointment as CEO of Barclays (including that they had exchanged
emails about this on 8 and 9 October 2015, following the recommendation of the
BNC) or of the fact that Mr Staley was liaising with Mr Epstein in respect of the
approach from Newspaper A up to 25 October 2015.
4.61.
Senior Executive A drafted the language “well before” into the Letter, on the basis
that they understood that Mr Staley and Mr Epstein had last met in person during
the visit by Mr Staley to Mr Epstein’s island in the US Virgin Islands in April 2015.
Senior Executive A considered that this was “well before” Mr Staley joined Barclays
in December 2015. Senior Executive A informed the Authority that the reference
in the letter to “last contact” was based upon their understanding of when Mr Staley
and Mr Epstein were last in each other’s company, which is what Senior Executive
A had understood was the relevant context of the Authority’s enquiry. Senior
Executive A informed the Authority that they did not have an impression that there
had been any contact between Mr Staley and Mr Epstein around the time of Mr
Staley’s appointment as CEO of Barclays but that they never asked, and did not
recall discussing, whether Mr Staley and Mr Epstein remained in contact by
telephone or email after April 2015.
4.62.
Board Member A informed the Authority that, at the time the Letter was drafted,
they did not know precisely when Mr Staley and Mr Epstein had last met.
4.63.
Mr Staley’s appointment as CEO of Barclays was announced on 28 October 2015
and Mr Staley was in role from 1 December 2015. The statement in the Letter that
Mr Staley’s last contact was “well before he joined Barclays in 2015” was therefore
inaccurate and misleading.
5.
FAILINGS
5.1.
The regulatory provisions relevant to this Notice are referred to in Annex A.
5.2.
Mr Staley was responsible for ensuring that aspects of the Letter that described his
relationship with Mr Epstein were factually accurate. The Letter was inaccurate and
misleading in two respects, about the nature and extent of Mr Staley’s relationship
with Mr Epstein and about the point of their last contact. Mr Staley reviewed the
penultimate draft of the Letter and suggested no amendments to the two
statements that were misleading.
The nature of Mr Staley’s relationship with Mr Epstein
5.3.
The Letter was misleading by stating that Mr Staley “did not have a close
relationship with Mr Epstein”.
5.4.
In forming the view that this statement was misleading, the Authority has had
regard to all the facts and matters set out in Annex B and in paragraphs 4.9 to 4.32
above. In particular, the statement did not fairly and accurately reflect the
following facts and matters, all of which were known to Mr Staley at the time he
approved the Letter:
(1)
Mr Staley confided in Mr Epstein on significant matters relating to Mr
Staley’s career. For example, Mr Staley disclosed to Mr Epstein details of
discussions he was having with Barclays that led to Mr Staley’s
appointment as CEO in October 2015. Notably, on 8 October 2015, Mr
Staley disclosed to Mr Epstein the fact of the decision made by the BNC
confirming its approval of Mr Staley’s appointment, which was not in the
public domain and which Mr Staley understood was “very confidential”.
(2)
The extensive email communications between Mr Staley and Mr Epstein
(including whilst Mr Epstein was serving his custodial sentence), written
in a notably warm tone, including the following emails from Mr Staley to
a. the email of 1 November 2009 in which Mr Staley stated “I owe
you much. And I deeply appreciate our friendship. I have few so
profound.”;
b. the email of 31 January 2015 which stated “The strength of a
Greek army was that its core held shoulder to shoulder, and
would not flee or break, no matter the threat. That is us.”;
c. the email of 13 August 2015 in which Mr Staley stated “The
counsel you have given [an individual connected to Mr Staley]
over the years has been a gift of great friendship.”; and
d. the email of 4 October 2015 in which Mr Staley stated “You never
wavered in our friendship these last three years. That means a
lot too [sic] me.”
(3)
Mr Staley travelled to Florida to visit Mr Epstein during his prison sentence
when he was on work release, and visited various of Mr Epstein’s
properties including the island owned by Mr Epstein in the US Virgin
Islands on three occasions, in addition to two further visits to a private
marina owned by Mr Epstein nearby his island, and his ranch in New
Mexico. Mr Staley also visited Mr Epstein in Palm Beach, Florida to join a
celebratory birthday dinner for Mr Epstein, and made more regular visits
to Mr Epstein’s home in New York.
5.5.
Mr Staley subsequently informed the Authority that he considered that he and Mr
Epstein were “professionally fairly close” or had a “professional, fairly close
relationship”. This contradicts the language used in the Letter.
5.6.
Mr Staley has informed the Authority that his correspondence with Mr Epstein
reflects the way he writes to business contacts and that, whilst he was grateful to
Mr Epstein for his assistance on certain matters, he may have been “gaming the
relationship” by conveying to Mr Epstein that they were closer than, in Mr Staley’s
view, they actually were. Whilst Mr Staley may use a warm tone to communicate
with business contacts, his communications with Mr Epstein were different in tone
and nature and very strongly suggest that the relationship between Mr Staley and
Mr Epstein was in any case objectively close.
5.7.
Consequently, this aspect of the Letter, which made clear that Mr Staley was the
source of the information, was misleading. Mr Staley had the opportunity to correct
the misleading statement that he had “confirmed to us that he did not have a close
relationship with Mr Epstein”, but failed to do so. Mr Staley must have appreciated
that the Authority would rely on this statement and must have been aware of the
risk that it would mislead the Authority. Therefore, by failing to correct the
misleading statement, Mr Staley acted recklessly.
Mr Staley’s last contact with Mr Epstein before he joined Barclays in 2015
5.8.
The Letter was misleading by stating that “[Mr Staley’s] last contact with Mr Epstein
was well before he joined Barclays in 2015”.
5.9.
Mr Staley and Mr Epstein were in contact, at least via email, until 25 October 2015:
this was 3 days before Mr Staley’s appointment as CEO was announced, and only
shortly before 1 December 2015, being the date that Mr Staley formally started in
role (see paragraph 4.63). The matters being discussed between Mr Staley and Mr
Epstein up to and including 25 October 2015, relating to both Mr Staley’s potential
appointment as CEO of Barclays and press enquiries in connection with his likely
appointment regarding his relationship with Mr Epstein, were significant and of
importance to Mr Staley. Consequently, this aspect of the Letter, which made clear
that Mr Staley was the source of the information, was inaccurate and misleading.
5.10.
Mr Staley knew that he had been in contact with Mr Epstein about the progress of
discussions with Barclays that led to Mr Staley’s appointment as CEO, and in
relation to the press enquiries, and that this contact continued until shortly before
his appointment was announced and just a few weeks before he started in role. Mr
Staley had the opportunity to correct this misleading statement in the Letter, but
failed to do so. Mr Staley must have appreciated that the Authority would rely on
this statement and must have been aware of the risk that it would mislead the
Authority. Therefore, by failing to correct the misleading statement, Mr Staley
acted recklessly.
Mr Staley’s explanation and the Authority’s assessment of it
5.11.
Mr Staley did not draft the Letter, and earlier draft versions had included more
detail about the nature and extent of Mr Staley’s relationship with Mr Epstein. Mr
Staley described his relationship with Mr Epstein to various members of senior
management at Barclays, including in the context of the Authority’s enquiry. Mr
Staley, and others at Barclays, understood the Authority’s request, which resulted
in the Letter, as being primarily focussed on whether Mr Staley was aware of, or
had witnessed, any of the alleged criminal activities of Mr Epstein during the course
of their apparent relationship.
5.12.
This does not, however, excuse Mr Staley for failing to correct the two misleading
statements in the Letter:
(1)
Mr Staley was the only person who reviewed or discussed the contents of
the Letter prior to it being finalised, who was able to comment on the
accuracy of these two statements from his own personal knowledge.
Those individuals at Barclays with whom Mr Staley discussed the matter
had, as would have been obvious to Mr Staley at the time, no first-hand
knowledge of the facts relating to the nature of the relationship between
Mr Staley and Mr Epstein, nor of the frequency or extent of their contact.
(2)
By stating that “[Mr Staley] has confirmed to us that he did not have a
close relationship with Mr Epstein”, the Letter implied that there was a
distance between Mr Epstein and Mr Staley that did not accurately reflect
the true position. Had the Letter accurately described the nature of the
relationship between Mr Staley and Mr Epstein, or the point at which the
two last were in contact, the Authority would have been in a position at
that stage to have considered whether it needed to ask further questions
of Mr Staley and seek clarity on the nature and extent of the relationship.
(3)
No individual at Barclays was aware that Mr Staley and Mr Epstein had
discussed press enquiries regarding their relationship, in connection with
Mr Staley’s likely appointment as CEO of Barclays, up until 25 October
2015, or had any knowledge of the fact that Mr Staley had shared
confidential information with Mr Epstein about negotiations relating to his
impending appointment as CEO in October 2015 (including the
confidential decision taken by the BNC on 8 October 2015). Mr Staley
did not inform anybody at Barclays of these matters, which were clearly
relevant to factual assertions that were included in the Letter (and which
were misleading).
5.13.
In fact, Mr Staley consistently did not accurately set out the nature of his
relationship with Mr Epstein to Barclays. In particular:
(1)
In October 2015, in response to the press enquiries relating to Mr Staley’s
likely appointment as CEO, regarding his relationship with Mr Epstein,
Barclays made statements which gave the misleading impression that Mr
Staley and Mr Epstein did not have a close relationship, including that
they had not had a discussion about the recruitment process that year
and that they did not have “anything resembling a close personal
association”. The Authority considers that these statements were based
on information provided by Mr Staley and that, in light of his impending
appointment as CEO, Mr Staley had an interest in giving Barclays the
impression of a greater distance between himself and Mr Epstein than
was the case at this time.
(2)
In September 2019, Mr Staley gave a presentation to the governing board
of Academic Institution A, of which he was a member, to address
enquiries about his relationship with Mr Epstein. The Talking Points were
prepared to assist Mr Staley in making this presentation and subsequently
provided part of the factual foundation for the Letter sent by Barclays to
the Authority. The Talking Points were misleading in various aspects, for
example, they included the inaccurate statements “At no time after his
conviction in 2008 did I allow [Mr Epstein] any connection with any aspect
of my professional life” and “I had limited contact with him post his
conviction”. The Talking Points were based on information provided by Mr
Staley to Barclays.
5.14.
The Authority has concluded that Mr Staley was aware of the risk which his
association with Mr Epstein posed to his reputation and his career, and that this
knowledge is relevant context to Mr Staley’s failure in 2015, and subsequently in
2019, to set out accurately the nature and extent of his relationship with Mr Epstein
to Barclays, and his failure to correct the two misleading statements in the Letter.
5.15.
The role of CEO requires an individual to exercise sound judgement and set an
example to staff at their firm. This is especially important in the context of the
requirement on individuals to act with integrity, be open and cooperative with the
Authority and the PRA, and to disclose appropriately information of which the
Authority would reasonably expect notice.
5.16.
By failing to correct the two misleading statements in the Letter, Mr Staley misled
the Authority. Mr Staley must have appreciated that the Authority would rely on
the content of the Letter and he must have been aware of the risk that the Letter
would mislead the Authority. Therefore, by approving the Letter containing the two
misleading statements, Mr Staley acted recklessly and with a lack of integrity and
failed to comply with ICR 1.
5.17.
Mr Staley must have realised that the Authority’s request to Barclays for
information about his relationship with Mr Epstein was important to the Authority.
By approving the Letter which contained the two misleading statements, without
informing Barclays that the statements were incorrect, Mr Staley failed to be open
and cooperative with the Authority and failed to disclose appropriately information
of which the Authority would have reasonably expected notice. Consequently, Mr
Staley failed to comply with ICR 3 and SMCR 4.
6.
SANCTION
Financial penalty
6.1.
The Authority’s policy for imposing a financial penalty is set out in Chapter 6 of
DEPP. In respect of conduct occurring on or after 6 March 2010, the Authority
applies a five-step framework to determine the appropriate level of financial
penalty. DEPP 6.5B sets out the details of the five-step framework that applies in
respect of financial penalties imposed on individuals in non-market abuse cases.
Step 1: disgorgement
6.2.
Pursuant to DEPP 6.5B.1G, at Step 1 the Authority seeks to deprive an individual
of the financial benefit derived directly from the breach where it is practicable to
quantify this.
6.3.
The Authority has not identified any financial benefit that Mr Staley derived directly
from his breaches of ICR 1, ICR 3 and SMCR 4.
6.4.
Step 1 is therefore £0.
Step 2: the seriousness of the breach
6.5.
Pursuant to DEPP 6.5B.2G, at Step 2 the Authority determines a figure that reflects
the seriousness of the breach. That figure is based on a percentage of the
individual’s relevant income. The individual’s relevant income is the gross amount
of all benefits received by the individual from the employment in connection with
which the breach occurred, and for the period of the breach. Where the breach
lasted less than 12 months, the relevant income will be that earned by the
individual in the 12 months preceding the end of the breach.
6.6.
Mr Staley’s breaches lasted less than 12 months. Accordingly, the relevant income
is his income from 9 October 2018 to 8 October 2019. The Authority considers Mr
Staley’s relevant income for this period to be £5,493,526.
6.7.
In deciding on the percentage of the relevant income that forms the basis of the
Step 2 figure, the Authority considers the seriousness of the breach and chooses a
percentage between 0% and 40%. This range is divided into five fixed levels which
represent, on a sliding scale, the seriousness of the breach; the more serious the
breach, the higher the level. For penalties imposed on individuals in non-market
abuse cases there are the following five levels:
(1)
Level 1 – 0%
(2)
Level 2 – 10%
(3)
Level 3 – 20%
(4)
Level 4 – 30%
(5)
Level 5 – 40%
6.8.
In assessing the seriousness level, the Authority takes into account various factors
which reflect the impact and nature of the breach, and whether it was committed
deliberately or recklessly.
6.9.
DEPP 6.5B.2G(9) lists factors relating to the nature of the breach. Of these, the
Authority considers the following factors to be relevant:
(1)
Mr Staley failed to act with integrity as he recklessly misled the Authority by
failing to correct the two misleading statements in the Letter.
(2)
Mr Staley held a senior position within Barclays and a prominent position
within the financial services industry as CEO of one of the largest global
banks.
(3)
Mr Staley is an experienced industry professional.
6.10.
DEPP 6.5B.2G(11) lists factors tending to show the breach was reckless. Of these,
the Authority considers the following factor to be relevant:
(1)
Mr Staley must have appreciated that there was a risk that his inaction in
failing to correct the two misleading statements in the Letter could result in
the Authority being misled.
6.11.
DEPP 6.5B.2G(12) lists factors likely to be considered ‘level 4 or 5 factors’. Of
these, the Authority considers the following factors to be relevant:
(1)
Mr Staley failed to act with integrity.
(2)
Mr Staley held a prominent position within the financial services industry as
CEO of one of the largest global banks.
(3)
The breaches were committed recklessly as Mr Staley approved the Letter
when he must have been aware of the risk that it would mislead the
Authority.
6.12.
DEPP 6.5B.2G(13) lists factors likely to be considered ‘level 1, 2 or 3 factors’. Of
these, the Authority considers the following factors to be relevant:
(1)
No profits were made, or losses avoided, either directly or indirectly as a
result of Mr Staley’s actions.
(2)
There was little or no loss or risk of loss to consumers, investors or other
market users individually and in general as a result of Mr Staley’s actions.
6.13.
Taking all of these factors into account, the Authority considers the seriousness of
the breaches to be level 4 and so the Step 2 figure is 30% of £5,493,526.
6.14.
Step 2 is therefore £1,648,057.
Step 3: mitigating and aggravating factors
6.15.
Pursuant to DEPP 6.5B.3G, at Step 3 the Authority may increase or decrease the
amount of the financial penalty arrived at after Step 2, but not including any
amount to be disgorged as set out in Step 1, to take into account factors which
aggravate or mitigate the breach.
6.16.
DEPP 6.5B.3G(2) lists factors which may have the effect of aggravating or
mitigating the breach. Of these, the Authority considers the following factor to be
relevant:
(1) The previous disciplinary record and general compliance history of the
individual. Mr Staley was the subject of regulatory action by the Authority
and the PRA in 2018 for breaching ICR 2 in the way he acted in response to
an anonymous letter that Barclays received raising concerns about its hiring
process.
6.17.
The Authority has not identified any factors which mitigate the breaches.
6.18.
Having taken into account the aggravating factor and lack of mitigating factors, the
Authority considers that the Step 2 figure should be increased by 10%.
6.19.
Step 3 is therefore £1,812,862.
Step 4: adjustment for deterrence
6.20.
Pursuant to DEPP 6.5B.4G, if the Authority considers the figure arrived at after Step
3 is insufficient to deter the individual who committed the breach, or others, from
committing further or similar breaches, then the Authority may increase the
penalty.
6.21.
The Authority considers that the Step 3 figure of £1,812,862 represents a sufficient
deterrent to Mr Staley and others, and so has not increased the penalty at Step 4.
6.22.
Step 4 is therefore £1,812,862.
Step 5: settlement discount
6.23.
Pursuant to DEPP 6.5B.5G, if the Authority and the individual on whom a penalty is
to be imposed agree the amount of the financial penalty and other terms, DEPP 6.7
provides that the amount of the financial penalty which might otherwise have been
payable will be reduced to reflect the stage at which the Authority and the individual
reached agreement. The settlement discount does not apply to the disgorgement
of any benefit calculated at Step 1.
6.24.
The Authority and Mr Staley did not reach agreement at Stage 1 and so no discount
applies to the Step 4 figure.
6.25.
Step 5 is therefore £1,812,862.
6.26.
The Authority therefore has decided to impose a total financial penalty of
£1,812,800 (rounded down to the nearest £100 in accordance with the Authority’s
usual practice) on Mr Staley for breaching ICR 1, ICR 3 and SMCR 4.
Prohibition order
6.27.
The Authority has the power to make prohibition orders in respect of individuals
under section 56 of the Act. The Authority’s approach to exercising these powers is
set out at Chapter 9 of the Enforcement Guide.
6.28.
In considering whether to impose a prohibition order, the Authority has had regard
to all relevant circumstances of the case. In particular, the Authority has considered
Mr Staley’s fitness and propriety with regard to his integrity and in respect of his
being open and cooperative with the Authority. The Authority has also had regard
to the period of time that has passed since the events described in this Notice.
6.29.
The Authority considers that Mr Staley acted recklessly and without integrity by
failing to correct the two misleading statements in the Letter. Mr Staley must have
appreciated that the Authority would rely on the content of the Letter and that there
was a risk that the Letter would mislead the Authority.
6.30.
Integrity, being open and cooperative with the Authority at all times, and
demonstrating good judgement are fundamental requirements of senior managers,
particularly a CEO of one of the UK’s most significant financial institutions. These
breaches represented a serious failure of judgement by Mr Staley when dealing
with sensitive matters involving the Authority. The Authority has also had regard
to the fact that Mr Staley was subject to regulatory action by the Authority and the
PRA in 2018, albeit relating to matters not connected to the findings in this Notice.
As a consequence of that action, the Authority would have expected Mr Staley to
have been particularly careful to ensure that the Letter was factually accurate.
6.31.
The Authority therefore expected Mr Staley, as CEO of Barclays, to recognise the
importance of acting with integrity in all of his professional dealings and to
recognise the importance of being open and cooperative with the Authority at all
times. A necessary feature of the effective supervision of firms in the UK is for their
senior managers to be open and frank in their dealings with the Authority, the PRA
and other regulators, particularly where those interactions relate to sensitive or
important matters. When a senior manager of a major financial institution fails to
act with integrity in a way that causes the Authority to be misled, there is a
substantial risk of harm to the Authority’s integrity objective, as such conduct
undermines confidence in the financial markets.
6.32.
Given the nature of the failings described in this Notice, and having regard to the
fact that Mr Staley’s misconduct occurred only a year after regulatory action was
taken against him in 2018, it appears to the Authority that Mr Staley is not a fit
and proper person to perform the role of a CEO or other senior management
function at an authorised or exempt person or exempt professional firm.
6.33.
The Authority considers that, to advance its integrity objective, and given the risk
posed to that objective, it is appropriate and proportionate in all the circumstances
to prohibit Mr Staley from performing any senior management or significant
influence function in relation to any regulated activity carried out by an authorised
person, exempt person or exempt professional firm.
7.
REPRESENTATIONS
7.1.
Annex C contains a brief summary of the key representations made by Mr Staley
in response to the Warning Notice and how they have been dealt with. In making
the decision which gave rise to the obligation to give this Notice, the Authority has
taken into account all of the representations made by Mr Staley, whether or not set
out in Annex C.
8.
PROCEDURAL MATTERS
8.1.
This Notice is given to Mr Staley under sections 57(3) and 67(4) and in accordance
with section 388 of the Act.
8.2.
The following paragraphs are important.
Decision maker
8.3.
The decision which gave rise to the obligation to give this Notice was made by the
RDC. The RDC is a committee of the Authority which takes certain decisions on
behalf of the Authority. The members of the RDC are separate to the Authority staff
involved in conducting investigations and recommending action against firms and
individuals. Further information about the RDC can be found on the Authority’s
committee
The Tribunal
8.4.
Mr Staley has the right to refer the matter to which this Notice relates to the
Tribunal. Under paragraph 2(2) of Schedule 3 of the Tribunal Procedure (Upper
Tribunal) Rules 2008, Mr Staley has 28 days from the date on which this Notice is
given to him to refer the matter to the Tribunal. A reference to the Tribunal is
made by way of a signed reference notice (Form FTC3) filed with a copy of this
Notice. The Tribunal’s contact details are: The Upper Tribunal, Tax and Chancery
Chamber, Fifth Floor, Rolls Building, Fetter Lane, London EC41 1NL (tel: 020 7612
9730; email: fs@hmcts.gsi.gov.uk). Further information on the Tribunal, including
guidance and the relevant forms to complete, can be found on the HM Courts and
Tribunal Service website:
8.5.
A copy of the reference notice (Form FTC3) must also be sent to the Authority at
the same time as filing a reference with the Tribunal. It should be sent to Richard
Topham at the Financial Conduct Authority, 12 Endeavour Square, London E20 1JN.
8.6.
Once any such referral is determined by the Tribunal and subject to that
determination, or if the matter has not been referred to the Tribunal, the Authority
will issue a final notice about the implementation of that decision.
Access to evidence
8.7.
Section 394 of the Act applies to this Notice.
8.8.
The person to whom this Notice is given has the right to access:
(1)
the material upon which the Authority has relied in deciding to give this
Notice; and
(2)
the secondary material which, in the opinion of the Authority, might
undermine that decision.
Third party rights
8.9.
A copy of this Notice is being given to Barclays as a third party identified in the
reasons above and to whom in the opinion of the Authority the matter to which
those reasons relate is prejudicial. As a third party, Barclays has similar rights to
those mentioned in paragraphs 8.4 and 8.8 above in relation to the matters which
identify it.
Confidentiality and publicity
8.10.
This Notice may contain confidential information and should not be disclosed to a
third party (except for the purpose of obtaining advice on its contents). In
accordance with section 391 of the Act, a person to whom this Notice is given or
copied may not publish the Notice or any details concerning it unless the Authority
has published the Notice or those details.
8.11.
However, the Authority must publish such information about the matter to which a
decision notice or final notice relates as it considers appropriate. The persons to
whom this Notice is given or copied should therefore be aware that the facts and
matters contained in this Notice may be made public.
Authority contacts
8.12.
For more information concerning this matter generally, contact Richard Topham
(direct line: 020 7066 1180 or email: richard.topham@fca.org.uk) or Nick Larkman
(direct line: 020 7066 6964 or email: nick.larkman@fca.org.uk) at the Authority.
Chair, Regulatory Decisions Committee
ANNEX A
RELEVANT STATUTORY AND REGULATORY PROVISIONS
RELEVANT STATUTORY PROVISIONS
1.1.
The Authority’s statutory objectives, set out in section 1B(3) of the Act, include the
integrity objective: protecting and enhancing the integrity of the UK financial
system.
1.2.
Section 66 of the Act provides that the Authority may take action against a person
if it appears to the Authority that he is guilty of misconduct and the Authority is
satisfied that it is appropriate in all the circumstances to take action against him.
1.3.
Section 66A of the Act provides that, for the purposes of action by the Authority
under section 66, a person is guilty of misconduct if any of conditions A to C is met
in relation to that person. Section 66A sets out Condition A, which states that:
‘(a) the person has at any time failed to comply with rules made by the [Authority]
under section 64A, and
(b) at that time the person was –
(i) an approved person,
(ii) an employee of a relevant authorised person, or
(iii) a director of an authorised person.’
1.4.
Section 56 of the Act provides that the Authority may make an order prohibiting an
individual from performing a specified function, any function falling within a
specified description or any function, if it appears to the Authority that that
individual is not a fit and proper person to perform functions in relation to a
regulated activity carried on by an authorised person, exempt person or a person
to whom , as a result of Part 20, the general prohibition does not apply in relation
to that activity. Such an order may relate to a specified regulated activity, any
regulated activity falling within a specified description, or all regulated activities.
RELEVANT REGULATORY PROVISIONS
1.5.
Individual Conduct Rule 1 (ICR 1) states: You must act with integrity.
1.6.
Individual Conduct Rule 3 (ICR 3) states: You must be open and cooperative with
the [Authority], the PRA and other regulators.
1.7.
Senior Manager Conduct Rule 4 (SMCR 4) states: You must disclose appropriately
any information of which the [Authority] or PRA would reasonably expect notice.
The Fit and Proper Test for Approved Persons
1.8.
The part of the Authority’s Handbook entitled “The Fit and Proper Test for Approved
Persons” (“FIT”) sets out the criteria that the Authority will consider when assessing
the fitness and propriety of a candidate for a controlled function. FIT is also
relevant in assessing the continuing fitness and propriety of an approved person.
1.9.
FIT 1.3.1G states that the Authority will have regard to a number of factors when
assessing the fitness and propriety of a person. The most important considerations
will be the person’s honesty, integrity and reputation, competence and capability
and financial soundness.
The Authority’s policy for exercising its power to make a prohibition order
1.10. The Authority’s policy in relation to prohibition orders is set out in Chapter 9 of the
Enforcement Guide (“EG”).
1.11. EG 9.1 states that the Authority may exercise this power where it considers that,
to achieve any of its regulatory objectives, it is appropriate either to prevent an
individual from performing any functions in relation to regulated activities or to
restrict the functions which he may perform.
DEPP
1.12. Chapter 6 of DEPP sets out the Authority’s statement of policy with respect to the
imposition and amount of financial penalties under the Act.
ANNEX B
CHRONOLOGY OF MR STALEY’S RELATIONSHIP WITH MR EPSTEIN
1999 TO JULY 2015
Mr Staley’s relationship with Mr Epstein – 1999 to 2008
1.1.
Mr Staley first met Mr Epstein in 1999 or 2000. At that time, Mr Staley was the
Head of JPM’s Private Bank. Mr Staley recalled being asked by JPM to speak or
meet with Mr Epstein on the basis that Mr Epstein was a client of JPM’s Private
Bank. From around 2002, Mr Staley also became the Head of the Asset
Management business at JPM, a role which he held for a time alongside his role as
the Head of the Private Bank.
1.2.
In around 2000 or 2001, it became apparent to Mr Staley that Mr Epstein had “an
incredible network” and Mr Epstein arranged meetings for Mr Staley with prominent
figures in business and politics. Mr Staley recalled at the time being of the view
that Mr Epstein was very knowledgeable about politics, economics and business.
1.3.
Mr Staley was introduced to a prominent figure in the financial services industry
through Mr Epstein and, in 2004, as a consequence of this introduction, was able
to lead an acquisition by JPM of a hedge fund. Mr Staley recalls Mr Epstein playing
an important role in introducing that transaction to Mr Staley and JPM, and in the
subsequent negotiations. Mr Epstein did not, however, formally act for or advise
either Mr Staley or JPM in connection with this transaction.
1.4.
At around this time, the Authority understands that Mr Staley would meet with Mr
Epstein during the daytime at an office that Mr Epstein had access to in New York,
and also at Mr Epstein’s home in New York.
1.5.
In addition to his home in New York, Mr Epstein owned an island in the US Virgin
Islands (named “Little St James”), a ranch in New Mexico, as well as properties in
Florida, London and Paris. At some time in 2005 or 2006, Mr Staley travelled on Mr
Epstein’s private plane to Mr Epstein’s island in the US Virgin Islands with members
of Mr Staley’s family, where they spent the night before transiting onto Mr Staley’s
boat. Mr Epstein was present for this visit by Mr Staley.
Evidence relating to Mr Staley’s relationship with Mr Epstein – 2008 to
1.6.
Mr Staley became the CEO of the Investment Bank at JPM in around September
2009, having been the CEO of Wealth and Asset Management at JPM since 2005.
He remained as the CEO of the Investment Bank until July 2012, at which point he
moved into the role of Chairman of the Investment Bank. In January 2013, Mr
Staley left JPM and became Managing Partner at BlueMountain. Mr Epstein was a
client of JPM’s Private Bank from prior to 2008 until early 2013.
1.7.
Between July 2008 and December 2012, Mr Epstein and Mr Staley exchanged more
than 1,100 emails via Mr Staley’s JPM email address. The emails suggest that they
spoke often on the telephone, as well as meeting in person. On certain occasions,
Mr Staley also used a personal account to correspond with Mr Epstein, albeit that
the nature of these communications was similar to those communications sent via
Mr Staley’s JPM email address. This email correspondence continued after Mr
Epstein ceased to be Mr Staley’s client, following Mr Staley’s move in 2009 to be
1.8.
On 30 June 2008, Mr Epstein pleaded guilty to two criminal state offences, of
soliciting a minor and soliciting a prostitute, and was sentenced to 18 months in
prison. Mr Epstein appears to have been released from prison by 15 August 2009.
He remained a client of JPM, and email correspondence between Mr Epstein and Mr
Staley continued throughout the period of Mr Epstein’s imprisonment.
Mr Staley and Mr Epstein’s networking
1.9.
Mr Staley recalled Mr Epstein providing him with important information about
changes to Mr Staley’s role at JPM, prior to Mr Staley being aware of these changes,
at certain points between 2009 and January 2013.
1.10.
Between 2008 and 2012, Mr Epstein and Mr Staley engaged in networking, and
there is evidence of apparent attempts by Mr Epstein to facilitate introductions for
Mr Staley and/or JPM to a number of high-profile individuals. During this time, Mr
Epstein and Mr Staley also discussed market fluctuations and related issues,
including during the financial crisis of 2008. For example, in an email to Mr Epstein
on 10 October 2008 (at which point Mr Epstein was in prison), Mr Staley stated that
“I am dealing with the Fed on an idea to solve things. I need a smart friend to help
me think through this stuff. Can I get you out for a weekend to help me (are they
listening?). Jes”.
Emails in which Mr Epstein seeks to assist Mr Staley’s career development
1.11.
During this period, Mr Staley and Mr Epstein discussed Mr Staley’s career and steps
that he should take to develop it. For example, on 7 September 2009, at or around
the time of Mr Staley’s appointment as CEO of the Investment Bank at JPM, Mr
Epstein wrote to Mr Staley stating: “I think you should start now, schedule a week
a month world travel. You need more staff. Travel team etc at least two more
people to do your grunt work and prep. Money well spent. They could be analysts
cum gophers.”
1.12.
Further, in May 2010, Mr Epstein wrote to Mr Staley to offer him advice about how
to most effectively answer television interview questions.
Evidence relating to the nature of the relationship
1.13.
During this period, Mr Staley and Mr Epstein also discussed personal matters. This
included introductions made by Mr Epstein to provide assistance to an individual
connected to Mr Staley in respect of their career choices. Mr Staley stated that he
was “deeply appreciative of [Mr Epstein’s] involvement” in this regard.
1.14.
There are also emails where Mr Staley and Mr Epstein refer to the closeness of their
‘friendship’. A number of these emails, including the following examples, were sent
whilst Mr Epstein was serving his prison sentence:
1.14.1. On 11 July 2008, Mr Staley sent an email to Mr Epstein in which he stated:
“I miss you. The world is in a tough place. Hang in there. Jes”, to which
Mr Epstein responded, “So am I”.
1.14.2. On 12 July 2008, Mr Staley wrote to Mr Epstein to inform him that Mr
Staley had gone “…to Maine yesterday to see the new boat. [The boat] is
coming along and will be everything that I hoped for. She wouldn't be
there without your encouragement. 18 months until she is anchored in
front of St Jeff [a name believed to be a reference to Mr Epstein’s island,
Little St James]. I hope we can talk this week. Jes."
1.14.3. On 31 July 2008, in an email from Mr Staley commenting on market
conditions, Mr Staley stated, “I hope you are hangin [sic] there. Just think
of the island and my boat anchored in front. I do.”
1.15.
Following Mr Epstein’s release from prison in 2009, further emails sent by Mr Staley
refer to his ‘friendship’ with Mr Epstein, including the following examples:
1.15.1. On 14 August 2009, Mr Epstein wrote to Mr Staley: “hope you are
enjoying your vacation. When you have some time, I would love to have
you come visit”, to which Mr Staley responded on 15 August 2009,
stating, “I’m having a great time. The boat is a long dream come true. I
will get to Florida soon. I need to shake your hand in freedom. Your
friend. Jes”
1.15.2. On 1 November 2009, whilst staying at Mr Epstein’s ranch in New Mexico,
Mr Staley told Mr Epstein “[…] I owe you much. And I deeply appreciate
our friendship. I have few so profound”.
1.15.3. On 19 September 2010, an email exchange suggests that Mr Staley and
Mr Epstein socialised with each other the previous evening. Mr Epstein
said “Thanks for last night”, to which Mr Staley responded “It was fun.
And great to see you with so many friends. […]”
1.15.4. On 5 March 2011, Mr Staley sent an email to Mr Epstein, which stated:
“[We] were talking tonight about what you have meant to me ... You have
paid a price for what has been accused. But we know what u have done
for us. And we count you as one of our deepest friends. And most honest
of people. Thanks, Jes”
1.15.5. On 23 August 2012, shortly after Mr Staley had left his role as CEO of the
Investment Bank at JPM, Mr Staley sent Mr Epstein an email stating:
“I can't tell you how much your friendship has meant to me. Thank you
deeply for the last few weeks. All will be fine. […] To my most cherished
friend, Jes."
1.15.6. On 31 December 2012, Mr Staley sent an email to Mr Epstein stating:
"I've tried calling a few times, even though the service in [location] is
pretty spotty. Thanks for all the friendship this year. You were
enormously kind and supportive. All looks good for next year. More
freedom, more deals, more building, more things we can do together.
Say hi to everyone. Happy New Year, Jes"
1.16.
Mr Staley has informed the Authority that, on one level, he did have a close
relationship with Mr Epstein and had been appreciative of certain things that Mr
Epstein had done for him. Mr Staley explained, however, that he considered that
he had a “professional, fairly close relationship” with Mr Epstein, and not a personal
friendship with Mr Epstein.
1.17.
Mr Staley suggested that the reference in an email to Mr Epstein being one of his
“deepest friends” reflected the warmth of tone that Mr Staley seeks to convey to
business contacts. Board Member A and Senior Executive C also informed the
Authority that they considered that Mr Staley typically used a warm tone when
communicating with business contacts. Mr Staley also suggested that his reference
to Mr Epstein as his “deepest friend” was in part reflective of Mr Staley “gaming the
relationship we had”, or conveying to Mr Epstein that they were closer than Mr
Staley considered them to be, and that this was a form of “banter”. Mr Staley also
informed the Authority that he never saw, nor was aware of, Mr Epstein’s alleged
crimes, albeit that he knew that Mr Epstein had been convicted for procuring a 17-
year-old for prostitution in 2008 and was aware of Mr Epstein’s indictment in July
2019. The Authority makes no findings that Mr Staley saw, or was aware of, any of
Mr Epstein’s alleged crimes.
Visits to Mr Epstein’s properties outside of New York, and visit to Mr Epstein whilst
serving a custodial sentence
1.18.
On or shortly after 15 January 2009, Mr Staley visited Mr Epstein during his prison
sentence in Florida whilst he was on work release, which followed discussions
seeking to arrange a visit from July 2008. Mr Staley informed the Authority that he
visited Mr Epstein because he (Mr Staley) was a “loyal person” and “just to show
support”.
1.19.
Between 2008 and December 2012, Mr Staley visited (or planned to visit) certain
of Mr Epstein’s properties, in addition to the more regular meetings with Mr Epstein
at Mr Epstein’s home in New York. For example:
1.19.1. There was correspondence in October 2009 discussing a potential visit by
Mr Staley to Mr Epstein’s London house. Mr Epstein and Mr Staley
exchanged emails relating to a possible meeting, which appears not to
have taken place. Mr Epstein wrote, “I screwed up, he just landed in new
your [sic] from london… when are you back?”, to which Mr Staley
responded, “Wednesday, then Washington Thurs and Friday. (and in my
book you never screw up)”. Mr Staley informed the Authority that he
never visited Mr Epstein’s London house.
1.19.2. On or around 1 November 2009, Mr Staley visited Mr Epstein’s ranch in
New Mexico. Mr Epstein was not at the ranch at the time of his visit.
During this visit, Mr Staley sent an email to Mr Epstein which stated: “So
when all hell breaks lose [sic], and the world is crumbling, I will come
here, and be at peace. Presently, I'm in the hot tub with a glass of white
wine. This is an amazing place. Truly amazing. Next time, we're here
together. I owe you much. And I deeply appreciate our friendship. I have
few so profound”. Mr Staley informed the Authority that he did not recall
Mr Epstein or anybody else being at the ranch when he visited (other than
people who worked there), and that he stayed for two hours to view it
and rode a horse, before continuing with his trip.
1.19.3. On 15 January 2010, Mr Staley visited Mr Epstein’s marina in St Thomas,
near to Mr Epstein’s island in the US Virgin Islands, where Mr Staley’s
boat had been given a private mooring by Mr Epstein. Mr Staley informed
the Authority that he recalled mooring his boat at Mr Epstein’s marina,
and that Mr Epstein had briefly “stopped by” to “take a look at” Mr Staley’s
boat, before Mr Staley then departed.
1.19.4. On 20 January 2010, Mr Staley visited Palm Beach, Florida, for dinner
with Mr Epstein and others, as part of a birthday celebration for Mr
Epstein. Mr Staley explained to the Authority that he does not recall this
visit.
1.19.5. Mr Staley also appears to have briefly visited Mr Epstein’s island in the
US Virgin Islands on 21 or 22 January 2011, shortly after Mr Epstein’s
birthday on 20 January. Following correspondence which suggested that
Mr Staley was planning to visit Mr Epstein’s island, on 22 January 2011
Mr Epstein wrote to Mr Staley that: "You are welcome to use jetskis
snorkels movies boats [sic]"; then "Atv's jet skis use the island, full gym
up and running [sic]". Mr Epstein then asked, "did you like the kitchen",
to which Mr Staley responded, stating: "Terrific. Lots of workers. What a
paradise. When I retire, I'm going to put a mooring in front of your dock
for my boat. Amazing place…". Mr Staley informed the Authority that he
did not recall this visit but thought that as part of a regular sailing trip in
the US Virgin Islands it was possible he had docked at the island and
taken a look around.
Evidence relating to Mr Staley’s relationship with Mr Epstein - January
2013 to July 2015
1.20.
On or shortly after 8 January 2013, Mr Staley left JPM and joined BlueMountain, as
Managing Partner. Mr Staley held the role of Managing Partner at BlueMountain
from on or around 8 January 2013 until 1 December 2015, when he was appointed
as CEO of Barclays. During that period, until October 2015, Mr Staley and Mr
Epstein continued to communicate extensively and fairly frequently, exchanging
almost 600 emails.
Evidence of Mr Staley’s interactions with Mr Epstein in a business context
Attempts to onboard Mr Epstein as a client of BlueMountain
1.21.
From February 2013 to March 2013, Mr Staley attempted to onboard Mr Epstein as
a client of BlueMountain. On 25 February 2013, having exchanged correspondence
with Mr Epstein about a possible “BMC investment”, Mr Staley provided Mr Epstein
with fund “subscription documents”, noting, “You’re my first client!”.
1.22.
In March 2013, Mr Staley and Mr Epstein exchanged emails about Mr Epstein’s
possible investment, and on 26 March 2013, Mr Staley’s personal assistant enquired
with colleagues at BlueMountain about whether they had received Mr Epstein’s
“trade documents”.
1.23.
In interview, Mr Staley’s recollection was that Mr Epstein did not, in fact, invest into
a fund managed by BlueMountain, and the Authority has not seen evidence that he
did so.
Continued networking between Mr Epstein and Mr Staley
1.24.
Mr Staley and Mr Epstein continued to network and discuss potential business
opportunities during this period. For example, Mr Epstein and Mr Staley discussed
arrangements for meetings between Mr Staley and certain prominent public figures
and business figures in March 2013, April 2013, September 2013 and May 2014.
Mr Staley also sought to invite a prominent business figure to dinner at Mr Epstein’s
home in New York in June 2014, although it is not clear whether this dinner did, in
fact, take place.
Potential personal business deal
1.25.
In December 2013, Mr Staley and Mr Epstein also discussed a potential investment
that they might make together in a start-up financial services firm based in New
York. Mr Staley did make an investment in the firm (in a personal capacity),
although it appears that Mr Epstein ultimately did not.
Evidence relating to personal matters
Continued assistance from Mr Epstein to an individual connected to Mr Staley
1.26.
Mr Epstein and Mr Staley continued to discuss how Mr Epstein might assist an
individual connected to Mr Staley with certain of their career choices. In March
2015, Mr Staley informally invited Mr Epstein to attend an academic ceremony for
the individual, although it appears that Mr Epstein did not attend.
1.27.
On 13 August 2015, Mr Staley wrote to Mr Epstein, stating: “[…] I know you [sic]
much of a role you had in arriving at this very big day. The counsel you have given
[…] over the years has been the gift of great friendship. Thanks my friend.”
References to nature of relationship
1.28.
Between January 2013 and July 2015, Mr Staley sent further emails describing Mr
Epstein as his “friend”, or wrote in similar terms. For example:
1.28.1. On 1 January 2015, Mr Staley emailed Mr Epstein, stating: “Happy new
year Jeffrey. Thanks for being the friend you are.”
1.28.2. On 31 January 2015, Mr Staley sent an email to Mr Epstein stating: "The
strength of a Greek army was that its core held shoulder to shoulder, and
would not flee or break, no matter the threat. That is us."
1.29.
There is also evidence that Mr Staley and Mr Epstein met socially during this period.
For example:
1.29.1. On 19 September 2014, Mr Epstein’s personal assistant emailed Mr
Staley’s personal assistant and told them “we have ran [sic] out of the
wine Jes likes” and asked whether there was “perhaps another sauvignon
blanc that we could keep on hand for Jes”.
1.29.2. On 23 October 2014, Mr Epstein’s personal assistant emailed Mr Staley’s
personal assistant to ask what Mr Staley would like for dinner that
evening with Mr Epstein: “could you please ask Jes what he is in the mood
for for dinner tonight?! I asked Jeffrey what he would like for dinner and
he requested I ask Jes!””
Evidence relating to Mr Staley’s career
Firm A
1.30.
Mr Staley joined the board of Firm A in May 2015 as a non-executive director and
held this role until 28 October 2015. Mr Staley resigned from this role at the same
time as it was announced that he had been appointed CEO of Barclays.
1.31.
On 27 May 2015, Mr Epstein sent an email to Mr Staley that stated, “I would like a
new investment person. Anyone at [Firm A]?”. Mr Staley informed the Authority
that he did not recall this email or taking any action in relation to it.
1.32.
Subsequently, on 25 June 2015, Mr Epstein sent an email to Mr Staley that asked
whether it would “be possible to set up an account at [Firm A]. Do not want to
cause any problem for you, id start with 100 million”. In response, Mr Staley wrote:
“I am getting closer to the people here. (I’m in the board meeting). Let’s talk about
it.” Mr Staley informed the Authority that he did not recall this email exchange or
ever discussing the matter with Mr Epstein. Mr Epstein did not become a client of
Visits to Mr Epstein’s properties
1.33.
Between January 2013 and April 2015, Mr Staley met with Mr Epstein from time to
time at Mr Epstein’s home in New York and also visited certain of Mr Epstein’s
properties outside of New York.
1.33.1. On 14 January 2015, following an email from Mr Staley to Mr Epstein in
which he had asked for “dock space”, Mr Staley moored his boat at Mr
Epstein’s marina in the US Virgin Islands.
1.33.2. On 12 April 2015, Mr Staley travelled to Mr Epstein’s island with a family
member whilst on vacation, for what he described as a “three-hour stop
in front of, or anchoring in front of his island”. Later that day, Mr Staley
wrote to Mr Epstein following his visit:
“Thanks for the flight and thanks for the lunch. Your place is crazy, and
special. It has a warmth and silliness that makes it yours. I count u as a
deep friend […] All the best.”
REPRESENTATIONS
1. A summary of the key representations made by Mr Staley, and of the Authority’s
conclusions in respect of them (in bold), is set out below.
The focus of the Authority’s enquiry
2. The Authority’s enquiry of 15 August 2019 was made to Barclays and was focussed on,
and was limited to, what Barclays had done to satisfy itself that Mr Staley had not
participated in or been aware of Mr Epstein’s alleged criminal activities. Mr Staley and
the other individuals at Barclays involved in drafting the Letter understood that this
was the focus of the Authority’s enquiry. The brevity of the Letter reflected its purpose,
namely, to reassure the Authority that Barclays had satisfied itself that Mr Staley had
not participated in or been aware of Mr Epstein’s alleged criminal activities.
3. That Barclays understood this to be the focus of the Authority’s enquiry is established
by the fact that the final paragraph of the Letter starts with “In sum”, before proceeding
to state that Barclays had no “cause to suspect that Barclays or [Mr Staley] have played
any role in the activities of Mr Epstein that have been under investigation”. The use
of “In sum” emphasised what Barclays considered to be the focus and context of the
Authority’s request for information.
4. The Authority’s enquiry was not solely concerned with whether or not Mr
Staley had participated in or been aware of Mr Epstein’s alleged criminal
activities. FCA Executive A’s note of their telephone call with Board Member
A on 15 August 2019 makes it clear that the Authority wanted Barclays to
explain how it was satisfied there was no impropriety with respect to the
relationship between Mr Staley and Mr Epstein. This request was made in the
light of recent press reports regarding their relationship, which called into
question Barclays’ CEO’s judgement and potentially his fitness and propriety.
In making the enquiry, the Authority was seeking assurance that Barclays had
discharged its regulatory obligations to ensure it understood and had properly
managed the risks to which it was exposed.
5. The first sentence of the Letter makes clear what Barclays understood the
enquiry to be about, as it says that Barclays was writing in response to a
“request for assurance that we have informed ourselves and are comfortable
in regard to any association of [Mr Staley] or Barclays with [Mr Epstein].” Mr
Staley reviewed and did not query this wording. In interview, when
commenting on his understanding of the Authority’s enquiry, Mr Staley stated
that Board Member A had told him that FCA Executive A “had made an enquiry
about what was Barclays aware of in terms of my relationship with Jeffery
Epstein” and that he also understood the enquiry to be concerned with
whether “Barclays or myself [was] aware of or engaged in the criminal
activities of [Mr] Epstein”. Accordingly, Mr Staley and Barclays clearly
understood the enquiry to be broader than Mr Staley now contends.
6. That this was Barclays’ understanding is supported by an email dated 5
October 2019, in which Board Member A asked Senior Executive A whether
the final paragraph of the Letter was needed, commenting that they thought
the Authority was “probably more worried about judgement than involvement
in wrong-doing”.
Information provided by Mr Staley to Barclays
7. Mr Staley did not mislead Barclays regarding his relationship with Mr Epstein. He
provided Barclays with a substantial amount of information relating to the history and
extent of the relationship. This information was, and was perceived at the time as
being, sufficient for Barclays to answer the Authority’s enquiry, having regard to the
context in which it was made and understood. How Barclays used that information to
respond to the Authority’s enquiry was not a matter determined by Mr Staley. Barclays
was not prevented by Mr Staley from providing a fuller portrayal of his relationship
with Mr Epstein; in late September 2019, Mr Staley had approved an earlier draft of
the Letter which contained detailed information about his relationship with Mr Epstein.
8. Mr Staley did not inform Barclays, at any stage, that he had “not had a close
relationship” with Mr Epstein, and this statement did not reflect what he had told
Barclays. He also did not assert to Barclays that he was last in contact with Mr Epstein
“well before” he joined Barclays. Mr Staley’s clear instructions and consistently stated
position to Barclays were that he had had a professional, fairly close relationship with
Mr Epstein, that he had not had any relationship with Mr Epstein since he joined
Barclays, and that the last occasion when Mr Staley met with Mr Epstein was around
April 2015 when he and a member of his family visited Mr Epstein’s island for a few
hours whilst on vacation. These statements were true and were supported by an
appropriate level of detail. The senior individuals at Barclays who were engaged in the
response to the Authority’s enquiry understood and accepted that Mr Staley’s
relationship with Mr Epstein had at times been close, but that it had not been anything
other than a professional one and that Mr Staley had been entirely unaware of the
unlawful activities for which Mr Epstein had been arrested in July 2019.
9. The Authority acknowledges that Mr Staley provided Barclays with a certain
amount of information regarding his relationship with Mr Epstein, and that
the two misleading statements were not statements that he had made to
Barclays but were instead drafted by Senior Executive A based on the
information provided by Mr Staley to Barclays.
10. However, when the Letter was drafted, there was clearly material information
that Barclays and those involved in drafting the Letter did not know, but which
Mr Staley undoubtedly knew. This included information which makes it
evident that the relationship between Mr Staley and Mr Epstein could not
fairly or accurately be described as not having been a close relationship. In
particular, Barclays was not aware that Mr Staley and Mr Epstein continued
to have extensive and fairly frequent contact after Mr Epstein ceased to be Mr
Staley’s client in 2009, including exchanging almost 600 emails during the
time that Mr Staley was at BlueMountain, or that on several occasions,
including shortly before he was appointed as CEO of Barclays, Mr Staley sent
Mr Epstein emails describing the strength of their friendship. Barclays was
also not aware that Mr Staley had been in regular contact with Mr Epstein up
to and during October 2015, and that they had discussed (i) his potential
appointment, which Mr Staley understood to be “very confidential”, and (ii)
press enquiries in connection with it regarding their relationship. Further,
Barclays was not aware that Mr Staley had attempted to onboard Mr Epstein
as a client of BlueMountain in 2013, that he had invited Mr Epstein to attend
an academic ceremony for an individual connected to Mr Staley in March 2015,
or that their social interactions were more extensive than Mr Staley had
outlined, including that he had actually visited Mr Epstein’s island on three
occasions and had visited Mr Epstein’s private marina on two further
occasions.
11. As described in paragraph 4.57 of this Notice, Senior Executive A informed
the Authority that, had they known about certain interactions between Mr
Staley and Mr Epstein (including those relating to Mr Staley’s visit to Mr
Epstein’s ranch and the academic ceremony invitation), they would have
asked further questions and taken any answers into account when drafting
the Letter. In addition, they considered that certain email communications
between Mr Staley and Mr Epstein appeared to show a relationship that did
not align with the way it had been characterised in the Letter.
12. Mr Staley was the only person at Barclays who knew all the relevant facts
regarding his relationship with Mr Epstein. He was the only person at Barclays
who was able to comment on the accuracy of the two statements from his
own personal knowledge and, having been asked to confirm that the Letter
was fair and accurate, it was his responsibility to ensure they were accurate.
Therefore, the fact that Mr Staley had provided Barclays with certain details
of his relationship with Mr Epstein and that he did not draft the two misleading
statements does not excuse his failure to correct them.
Mr Staley’s approval of the Letter
13. Mr Staley did not participate in the telephone conversations between Barclays and the
Authority on 15 August 2019 and 4 October 2019. He was not involved in the drafting
of the Letter, did not seek to influence it (beyond suggesting, in the early stages,
changes to the Talking Points), and did not make the amendments which introduced
the two allegedly misleading statements after the telephone call of 4 October 2019.
14. When Senior Executive A provided Mr Staley with a draft of the Letter on 6 October
2019, they told Mr Staley that it was based upon the content of a telephone
conversation which had taken place between FCA Executive A and Board Member A on
4 October 2019, as a result of which Senior Executive A considered that the draft would
“meet the [Authority’s] needs”. The draft included the two statements, which Senior
Executive A had introduced after being informed by Board Member A about the 4
October 2019 telephone conversation.
15. Mr Staley questioned the accuracy of the draft letter in respect of the statement that
he did not have a close relationship with Mr Epstein. Senior Executive A provided an
explanation for the revised terms of the draft and Mr Staley reasonably accepted Senior
Executive A’s explanation and advice. Senior Executive A’s advice can reasonably be
characterised as recommending approval of the draft and it can properly be inferred
that it influenced Mr Staley to approve the draft. It was reasonable for Mr Staley to
leave the judgement as to the adequacy or otherwise of the drafting of the Letter to
Senior Executive A, particularly in the knowledge that Senior Executive A was entirely
aware of the relevant background and that the Letter had been drafted on the basis of
discussions which had taken place between Board Member A and the Authority only
two days beforehand. Mr Staley was reasonably entitled to conclude that Board
Member A and Senior Executive A would not have recommended a draft which they
considered was either capable of misleading the Authority or which in any way fell
short of the response that the Authority required.
16. The Authority acknowledges that Mr Staley was not involved in the telephone
conversations between Barclays and the Authority and that he did not draft
the Letter. However, the Authority does not consider that it can be inferred
from the evidence regarding the correspondence between Mr Staley and
Senior Executive A, that Mr Staley approved the draft letter as a result of
Senior Executive A’s advice. Senior Executive A did not advise as to the
accuracy of the two statements, but rather informed Mr Staley that, based on
what Mr Staley had told them, they felt the Letter was fair, but Mr Staley
needed to satisfy himself of this. Further, Senior Executive A was not in the
position to give such advice, given that only Mr Staley knew the true nature
of his relationship with Mr Epstein.
17. Mr Staley cannot have understood Senior Executive A’s indication that the
Letter as drafted was likely to “meet the [Authority’s] needs” as advice to
approve the two factual statements, irrespective of their accuracy. The
evidence suggests that this statement reflected Senior Executive A’s view at
the time, based on what Board Member A had told them about their
conversation with FCA Executive A on 4 October 2019, that the form of the
Letter and the matters it addressed were suitable for Barclays’ response to
the Authority’s enquiry. Mr Staley cannot have thought it reasonable to leave
the judgement as to the accuracy of the drafting of the Letter to Senior
Executive A, given that Senior Executive A told him “we want to be sure that
you feel that the language is fair and accurate” and in circumstances where
he must have known that neither of the two statements was accurate.
Mr Staley’s knowledge
18. It is unfair for the Authority to seek to distinguish Mr Staley’s position from that of
Barclays, on the basis that only Mr Staley knew of the nature and extent of the
relationship between himself and Mr Epstein. Such a distinction ignores the volume of
detailed information that Mr Staley provided to Barclays, of which Senior Executive A
was entirely aware when the Letter was drafted and presented to Mr Staley on 6
October 2019. In order to sustain the distinction, it would be necessary to impute to
Mr Staley an unreasonable and unrealistic realisation that he was required to provide
Barclays with an even greater level of detail concerning the history of his relationship
with Mr Epstein than the detailed account which he had already provided. Such a
distinction also does not stand up to scrutiny when set against the knowledge or
understanding that Senior Executive A and Board Member A had of the nature and
purpose of the Authority’s enquiry.
19. At the time he approved the Letter, Mr Staley did not possess copies of his email
correspondence with Mr Epstein up to and including 25 October 2015; this
correspondence had been via his JPM and BlueMountain email accounts to which he no
longer had access. It is unreasonable to expect, in the absence of that material, that
Mr Staley would necessarily have remembered, almost four years later, when he was
last in email correspondence or telephone contact with Mr Epstein, so as to positively
cause him to question the second allegedly misleading statement.
20. The facts which were not within the public domain and not known to Barclays were the
extent and content of this email correspondence. The facts which were disclosed by
this email correspondence add little if anything to a reasonable interpretation of the
relationship between Mr Staley and Mr Epstein of which Barclays was aware and it is
unreasonable to attribute to Mr Staley a recollection of their content by October 2019.
21. As explained in paragraph 10 above, Barclays was not aware of material
information regarding the nature of Mr Staley’s relationship with Mr Epstein
and when they were last in contact. Only Mr Staley knew whether or not the
Letter accurately characterised his relationship with Mr Epstein and when
they had last been in contact. Accordingly, the Authority considers that
Barclays was in a position which was factually distinguishable from Mr
Staley’s position.
22. The Authority accepts that Mr Staley did not have access to his JPM and
BlueMountain email accounts at the time the Letter was drafted. However,
Mr Staley must have known at that time that he had been in contact with Mr
Epstein with respect to (i) Mr Staley’s potential appointment as CEO of
Barclays and (ii) press enquiries in connection with that appointment and
regarding his relationship with Mr Epstein; Mr Staley must also have known
that this contact continued until shortly before his appointment as CEO was
announced, given that these matters were significant and of importance to
him. Further, the Authority considers that Mr Staley cannot have failed to
recall the extent and nature of his email correspondence with Mr Epstein. As
is clear from the chronology of their relationship summarised in Annex B, the
emails provide ample evidence of social and personal interactions between
Mr Staley and Mr Epstein, and include several emails from Mr Staley referring
to the closeness of their friendship.
23. The Authority also considers it relevant, when considering what Mr Staley
now says he remembered in 2019, that he did not accurately convey the
nature of his relationship with Mr Epstein to Barclays in October 2015, when
discussing press enquiries regarding that relationship and relating to Mr
Staley’s likely appointment as CEO. Mr Staley had access to his BlueMountain
emails at that time and was also in contact with Mr Epstein regarding those
press enquiries. The Authority has concluded that Mr Staley was aware of the
risk which his association with Mr Epstein posed to his reputation and his
career, and that this knowledge is relevant context to Mr Staley’s failure to
provide Barclays in 2015 and 2019 with material information regarding his
relationship with Mr Epstein, and his failure to correct the two misleading
statements in the Letter.
Mr Staley’s relationship with Mr Epstein
24. Mr Staley was correct to describe his relationship with Mr Epstein to the Authority as
having been a “professional, fairly close relationship”. It was a relationship that was
grounded in business. Mr Epstein was a particularly valuable source of information
and had many influential contacts in banking and commerce. It did not involve a
personal friendship and there is no evidence that it did.
25. The email correspondence between Mr Staley and Mr Epstein does not demonstrate a
close relationship, as the extent of the social interaction between them demonstrates
otherwise. The email correspondence establishes regular email contact and,
principally, correspondence concerning business, news items, informal requests for
advice and occasional personal matters, none of which can reasonably be interpreted
as unusual in an important business relationship of this value. There is no evidence
within the emails of Mr Epstein ever visiting Mr Staley’s home, going on holiday with
him and his family, or attending private functions at which Mr Staley’s family were
present.
26. There were four separate aspects of Mr Staley’s personal life which involved Mr Epstein:
the first related to the assistance provided by Mr Epstein to an individual connected to
Mr Staley; the second concerned two separate visits by Mr Staley to Mr Epstein’s island
in the company of family members (one of which was business related); the third
involved Mr Staley visiting Mr Epstein in January 2009 when Mr Epstein was on work
release while serving a prison sentence; and the fourth involved Mr Staley’s visit to Mr
Epstein’s ranch when Mr Epstein was not present. These were extremely isolated
events when viewed in the context of a relationship which extended over a period of
approximately 15 years. The occasional dining invitations to Mr Epstein’s home in New
York, at which many well connected persons were usually present, were for business
purposes.
27. The fact that Mr Staley decided to cease all contact with Mr Epstein when his
appointment as CEO to Barclays was confirmed in October 2015, because he
considered that such a relationship would be inconsistent with that position, is not
reflective of a personal friendship.
28. Mr Staley’s explanation to the Authority that he and Mr Epstein had a
“professional, fairly close relationship” contradicts the statement in the
Letter that they did not have a close relationship. Mr Staley had the
opportunity to correct the Letter, so that it did not inaccurately describe the
nature of their relationship, but he chose not to do so.
29. Furthermore, the extensive email communications between Mr Staley and Mr
Epstein (including whilst Mr Epstein was serving his custodial sentence), and
the tone and nature of those communications (including emails sent by Mr
Staley shortly before he was appointed as CEO of Barclays), strongly suggest
that the relationship between Mr Staley and Mr Epstein was objectively close.
Mr Staley sent emails to Mr Epstein which were written in a notably warm
tone and referred to the strength of their friendship, including those emails
mentioned at paragraph 5.4(2) of this Notice and other emails which
described Mr Epstein as one of his “deepest” or “most cherished” friends.
Notwithstanding that there is no evidence of certain types of social
interactions between Mr Staley and Mr Epstein (for example, of Mr Epstein
ever visiting Mr Staley’s home), there is ample evidence of social and personal
interactions between them. It is therefore evident from the emails exchanged
between them that their relationship could not fairly or accurately be
described as not having been a close relationship.
30. In addition, the four aspects of his personal life that Mr Staley says involved
Mr Epstein support the Authority’s view that the statement that Mr Staley and
Mr Epstein did not have a close relationship is inaccurate and misleading:
a. Mr Staley told Mr Epstein in August 2015 that the counsel he had given
to the individual connected to Mr Staley “has been the gift of great
friendship”.
b. Mr Staley in fact visited Mr Epstein’s island in the US Virgin Islands on
three separate occasions, in addition to two further visits to a private
marina owned by Mr Epstein nearby his island.
c. Mr Staley not only visited Mr Epstein during his prison sentence in
Florida while he was on work release, but also sent Mr Epstein a
number of supportive emails whilst he was serving his prison sentence.
d. On his visit to Mr Epstein’s ranch, Mr Staley told Mr Epstein “[…] I owe
you much. And I deeply appreciate our friendship. I have few so
profound.” Like his visits to Mr Epstein’s properties in the US Virgin
Islands, Mr Staley’s visit to Mr Epstein’s ranch was for no obvious
business or professional purpose.
31. Further, the statement that Mr Staley and Mr Epstein did not have a close
relationship is inconsistent with the fact that Mr Staley confided in Mr Epstein
on significant matters relating to Mr Staley’s career, including his impending
appointment as CEO of Barclays, which was not in the public domain and
which Mr Staley understood was “very confidential”.
32. Mr Staley did not independently decide to cease all contact with Mr Epstein.
Rather, he made that decision on the advice of Senior Executive B that he
should not have any contact with Mr Epstein going forward.
The accuracy and materiality of the two allegedly misleading statements
33. The two statements were not factually inaccurate since they were reasonably required
to be interpreted in the context in which they were provided. Mr Staley did not have
a close relationship with Mr Epstein when considered in the context of the focus of the
Authority’s enquiry. The statement that Mr Staley’s last contact with Mr Epstein was
“well before” he joined Barclays was intended by Senior Executive A to convey the date
of the last meeting between Mr Staley and Mr Epstein, which would have been the last
occasion on which Mr Staley could have been aware of Mr Epstein’s alleged criminal
activities, and so was accurate in that context.
34. The two statements were also not material to answering the Authority’s enquiry and
were not intended to be. The statements were not the focus of the Authority’s enquiry.
They would only have been material had the Authority asked for a description of the
nature and extent of Mr Staley’s relationship with Mr Epstein or been asked to be
informed of all contact between them before and after Mr Staley was appointed to the
position of CEO of Barclays.
35. The Authority considers that both statements were clearly factually
inaccurate. As set out in paragraphs 28 to 31 above, the evidence of Mr
Staley’s interactions with Mr Epstein, along with Mr Staley’s own description
of the relationship to the Authority, demonstrates the inaccuracy of the
statement that Mr Staley and Mr Epstein did not have a close relationship. In
respect of the statement regarding Mr Staley’s last contact with Mr Epstein,
they were in contact regarding Mr Staley’s potential appointment as CEO of
Barclays, and in relation to press enquiries in connection with that
appointment
regarding
their
relationship,
until
shortly
before
his
appointment was announced. The fact that Senior Executive A had in mind
the date when Mr Staley and Mr Epstein last met in person when drafting this
statement does not make it factually accurate. Further, Senior Executive A,
unlike Mr Staley, was not aware that Mr Staley and Mr Epstein continued to
be in contact until October 2015.
36. The Authority does not agree that the statements were accurate in the context
of the focus of the Authority’s enquiry. Both statements implied a greater
distance between Mr Staley and Mr Epstein than was the case prior to Mr
Staley’s appointment as the CEO of Barclays. Further, as explained in
paragraphs 4 to 6 above, the evidence does not support Mr Staley’s assertion
that the Authority was only interested in whether or not Mr Staley had
participated in, or been aware of, Mr Epstein’s alleged criminal activities.
37. The Authority also disagrees with Mr Staley’s assertion that the two
statements were not material. They were clearly material to the Authority’s
request for assurance about the association between Mr Staley and Mr Epstein
as well as its concern about Mr Staley’s judgement in relation to that
association. Further, their materiality is evident from the fact that they were
advanced by Barclays in order to explain why Mr Staley was not aware of Mr
Epstein’s conduct: the first statement indicates a distance between Mr Staley
and Mr Epstein in order to explain why Mr Staley was not aware of Mr
Epstein’s misconduct, while the second statement gives the misleading
impression of temporal distance in the relationship.
Whether the Authority was misled
38. Having regard to the focus of the Authority’s enquiry, the purpose of the Letter, the
factual context in which it was drafted and the materiality of the two allegedly
misleading statements, the Letter did not mislead the Authority.
39. It is disingenuous for the Authority to claim that, in the light of the contents of the
Letter, the Authority concluded that it did not need to make any further enquiries. The
lack of immediate follow-up reflects the fact that the Letter addressed the reason for
the enquiry, namely, to ascertain whether Barclays was satisfied that Mr Staley had
not participated in or been aware of Mr Epstein’s alleged criminal activities.
40. The contents of the Letter might have been expected to have prompted further enquiry
by the Authority, if it did not reflect what had been agreed in the telephone
conversation on 4 October 2019. Board Member A clearly provided a preview of the
proposed response to FCA Executive A on 4 October 2019, which appears to have
resulted in Senior Executive A making the changes introducing the allegedly misleading
statements and the advice to Mr Staley that the letter as drafted was considered to be
sufficient to meet the Authority’s needs. The proposition that the Authority was misled,
that the two statements were material, and that no further questions were asked in
the light of the contents of the Letter, is therefore fundamentally disputed.
41. The documentary evidence demonstrates that: (i) the statement that Mr
Staley and Mr Epstein did not have a close relationship is false, and (ii) Mr
Staley and Mr Epstein were in contact until just before Mr Staley’s
appointment as CEO. Therefore, the two statements were clearly misleading
and, as they were material to the Authority’s enquiry (see paragraph 37
above), they misled the Authority.
42. The Authority was entitled to expect the content of the Letter to be an
accurate characterisation of the nature of the relationship between Mr Staley
and Mr Epstein. The Authority relied on the information provided by Barclays
in order to determine what further action to take, if any. The Letter, on its
face, did not give rise to any need to seek clarification. FCA Executive A’s
interpretation of the Letter was that Barclays and Mr Staley were confirming
that Mr Staley’s relationship with Mr Epstein was not of a personal nature but
was instead a client/business relationship which had ceased a significant
period of time prior to Mr Staley joining Barclays. As a result of the Letter
and the assurances it contained, the matter of Mr Staley’s relationship with
Mr Epstein was reasonably not considered further by the Authority until
additional information came to light a few weeks later. Had the Letter
accurately described the nature of the relationship between Mr Staley and Mr
Epstein, or the point at which the two last were in contact, the Authority
would have been in a position at that stage to have considered whether it
needed to ask further questions of Mr Staley and seek clarity about the nature
and extent of the relationship.
43. The amendments to the draft of the Letter following the 4 October 2019
telephone call, which resulted in the two misleading statements being
introduced, support the Authority’s view that the statements were material
and relevant to the Authority. The fact that the Letter was considered by
Senior Executive A to be sufficient to meet the Authority’s needs does not
mean that it was reasonable for Mr Staley to approve the Letter, in
circumstances where (i) he must have known that the two statements were
inaccurate, and (ii) he was the only person who reviewed or discussed the
contents of the Letter prior to it being finalised, who was able to comment on
the accuracy of the two statements from his own personal knowledge.
Mr Staley’s account to Barclays of the nature of his relationship with Mr Epstein
44. The allegation that Mr Staley consistently did not accurately set out the nature of his
relationship with Mr Epstein to Barclays is wrong and unfair. It is not the basis of the
case against Mr Staley and is irrelevant to the case against him based on the two
statements in the Letter.
45. Barclays’ statement in response to press enquiries in 2015 (denying that Mr Epstein
and Mr Staley had a close personal relationship) was accurate and consistent with what
was stated in the Letter. The press interest was in the context of allegations of sexual
misconduct by Mr Epstein.
46. Mr Staley was only provided with a version of the letter containing the statement “[Mr
Staley] confirms that he has had no contact with [Mr Epstein] nor discussion of this
matter this year” after it was sent and so he had no opportunity to correct it. In any
event, Senior Executive B knew that Mr Staley’s contact with Mr Epstein had continued
up until October 2015. Mr Staley disputes any suggestion that he told anyone at
Barclays that he had no contact with Mr Epstein in relation to the recruitment process
in 2015.
47. The Talking Points were not drafted by Mr Staley, were intended to be no more than
an aide memoire for the purposes of an oral presentation by Mr Staley to Academic
Institution A and did not set out the full extent of the information provided by Mr
Staley.
48. The Talking Points drew attention to the fact that Mr Staley had many business
meetings with Mr Epstein, he attended dinners hosted by Mr Epstein, he visited Mr
Epstein’s island and he visited Mr Epstein while Mr Epstein was on work release from
prison. In so far as Mr Staley did not inform Barclays of some of the details of his
relationship with Mr Epstein, it is unreasonable for the Authority to contend either that
he should have done so or that this constituted a pattern of misleading conduct. Mr
Staley could not reasonably have been expected to provide Barclays with every aspect
of his professional and commercial involvement with Mr Epstein given the context of
the media interest in 2019 and the context of the Authority’s request for reassurance.
49. The evidence supports the Authority’s conclusion that Mr Staley consistently
did not accurately set out the nature and extent of his relationship with Mr
Epstein to Barclays. The Authority has concluded that, both in 2015 and in
2019, Mr Staley was aware of the risk which his association with Mr Epstein
posed to his reputation and his career. The Authority considers this is relevant
context in assessing Mr Staley’s failure to correct the two misleading
statements.
50. In October 2015, Barclays made inaccurate statements about Mr Staley’s
relationship with Mr Epstein to the press on the basis of information provided
to Barclays by Mr Staley. Notwithstanding the context of the press enquiries,
Mr Staley did not reveal to Barclays that he had shared with Mr Epstein
confidential information relating to the process of his appointment as CEO.
The Authority considers that, in the light of his impending appointment as
CEO, Mr Staley had an interest in giving Barclays the impression of a greater
distance between himself and Mr Epstein than was the case at the time.
51. The Authority considers that the statement made by Barclays to a journalist
prior to an article published on 1 November 2015, that Mr Staley and Mr
Epstein did not have “anything resembling a close personal association”, was
inaccurate for the same reasons as the statement in the Letter that they did
not have a “close relationship” was inaccurate.
52. The statement that Mr Staley and Mr Epstein had not discussed Mr Staley’s
potential appointment as the CEO of Barclays in 2015 was also inaccurate, as
Mr Staley must have known at the time. Mr Staley’s denial that he told anyone
at Barclays that he had had no such contact with Mr Epstein is inconsistent
with the evidence of Senior Executive B, who told the Authority in interview
that they were very assiduous to ensure that what Barclays asserted was in
accordance with what Mr Staley recollected. As Senior Executive B had no
previous knowledge of the relationship between Mr Staley and Mr Epstein,
and as the information they provided to Law Firm A was based on information
that they had received from Mr Staley, the Authority considers it reasonable
to conclude that Mr Staley did inform Senior Executive B that he had had no
discussions with Mr Epstein in connection with the recruitment process in
2015. The Authority acknowledges that Mr Staley does not appear to have
seen the statement until after the letter containing it was sent, but there is
also no evidence that Mr Staley subsequently clarified the position.
53. Whilst the Talking Points were not drafted by Mr Staley, they were prepared
on the basis of information provided by him. Although they contained certain
information regarding Mr Staley’s relationship with Mr Epstein, they also
included some materially inaccurate statements which demonstrate that, as
at October 2015, Mr Staley had not accurately set out the nature and extent
of his relationship with Mr Epstein to Barclays. In particular, the Talking
Points falsely stated, “At no point after his conviction in 2008 did I allow [Mr
Epstein] any connection with any aspect of my professional life” and, “I had
limited contact with him post his conviction”. This was therefore not simply
a matter of Mr Staley not informing Barclays of all details of his relationship
with Mr Epstein, but instead involved him in giving Barclays a misleading
impression of the nature and extent of that relationship.
Failings in the Authority’s management of its enquiry
54. The Authority’s management of its enquiry is largely, if not wholly, responsible for the
alleged deficiencies in the Letter. There were significant evidential and procedural flaws
in the Authority’s process, both before and after the Letter was sent.
55. The Authority failed to specify in the telephone call of 15 August 2019 the extent and
detail of the information required and failed to formalise its enquiry in writing. This
created uncertainty within Barclays as to what was required and is likely to have
influenced the final draft of the Letter. The Authority also failed to make a note of or
formalise in writing the content of the telephone call of 4 October 2019, which clearly
influenced the changes to the draft made by Senior Executive A on 5 October 2019.
Mr Staley has been seriously prejudiced as a result.
56. The Authority unreasonably did not give Mr Staley or Barclays an opportunity to
respond to its concern that the Letter did not contain accurate information before
commencing its investigation. Rather than immediately commence an investigation,
the Authority should have explored whether there had been a misunderstanding as to
the nature and extent of the Authority’s enquiry. A request for clarification would have
revealed that Mr Staley had provided Barclays with a substantial amount of information
in respect of his relationship with Mr Epstein, which had been incorporated into earlier
drafts. Further, it would have revealed that Mr Staley did not inform Barclays that he
did not have a close relationship with Mr Epstein or that his last contact with Mr Epstein
was well before he joined Barclays.
57. The fact that the Authority’s request to Barclays was not made in writing does
not excuse or mitigate Mr Staley’s conduct, nor does the lack of a record of
the telephone call of 4 October 2019. It is clear from the Letter that Barclays
understood what the Authority expected of it. In any event, regardless of
whether there was any uncertainty within Barclays as to what was required,
there cannot have been any doubt that it was required to provide a factually
accurate response.
58. The Authority does not consider that it was unreasonable or unfair to
commence an investigation, and not seek clarification from Barclays and/or
Mr Staley, after it received information following receipt of the Letter, which
suggested that the Letter included two misleading statements. The Authority
reasonably expects to be provided with accurate information by the firms and
individuals it regulates and to be able to rely on this information. The
Authority does not consider that its approach has caused any prejudice to Mr
Staley, as he has had the opportunity during the course of the Authority’s
investigation and these RDC proceedings to explain why the statements were
made.
Mr Staley did not act recklessly and did not breach ICR 1
59. The Authority cannot establish, as a matter of fact and law, that Mr Staley acted
recklessly. In order to prove recklessness, it is necessary for the Authority to establish
that Mr Staley was aware of a risk that the Authority might be misled and chose to
disregard it. Mr Staley acted on his understanding of the purpose of the enquiry made
to Board Member A, and the advice provided to him by Senior Executive A that the
Letter would meet the Authority’s needs, and the proper inference to be drawn from
the evidence is that he did not perceive a risk that the Authority might be misled. Mr
Staley’s actions and omissions, in not correcting or altering the draft of the Letter
presented to him on 6 October 2019, constituted no more than inadvertence on his
part in failing to ensure that the Letter reflected his consistent instructions to Barclays,
and do not amount to recklessness.
60. Further, there was no significant risk that the Authority might be misled, given the
purpose of its enquiry and the reported terms of the telephone conversation of 4
October 2019. The two statements were not material to the Authority’s enquiry and
the Authority was not in fact misled.
61. As the allegation that Mr Staley acted with a lack of integrity is grounded, and is entirely
dependent, upon the allegation that he acted recklessly, if recklessness is not
established then there would be an insufficient basis for concluding that Mr Staley
acted without integrity in breach of ICR 1. Further, while reckless conduct is capable
of resulting in a finding of a lack of integrity, the two are not synonymous.
62. The Authority considers that Mr Staley must have appreciated that the
Authority would rely on the contents of the Letter. The Authority relies on
accurate information from firms and individuals approved to perform senior
management functions to allow it to effectively regulate and make enquiries
as necessary, based on the information provided. Regardless of his
understanding of the primary focus of the Authority’s enquiry, Mr Staley must
have appreciated that the two statements were material to the Authority’s
enquiry, as they implied a greater distance between Mr Staley and Mr Epstein
than was the case prior to Mr Staley’s appointment as CEO of Barclays, and
were advanced by Barclays in order to explain why Mr Staley was not aware
of Mr Epstein’s conduct. In any case, as Barclays’ CEO, it must have been
obvious to Mr Staley that the response needed to be prepared with care and
not be misleading.
63. Mr Staley must also have been aware that the two statements were
inaccurate. In interview he characterised his relationship with Mr Epstein as
being a “professional, fairly close relationship”, which contradicts the
wording in the Letter that “he did not have a close relationship with Mr
Epstein”. As noted in paragraph 22 above, Mr Staley must have known that
he was in contact with Mr Epstein until just before he was appointed as CEO
of Barclays, given that the matters they discussed related to Mr Staley’s
potential appointment and press enquiries in connection with his likely
appointment regarding his relationship with Mr Epstein, and so were
significant and of importance to Mr Staley. He must therefore have known
that the statement that his last contact with Mr Epstein was “well before” he
joined Barclays was inaccurate.
64. As Mr Staley must have been aware that the Authority would rely on the
contents of the Letter, and that the two statements were inaccurate, it is not
credible for Mr Staley to assert that he was not aware that, in allowing
inaccurate information to be contained in the Letter, there was a risk that the
Authority would be misled.
65. As set out in paragraphs 16 and 17 above, the Authority does not consider it
was reasonable for Mr Staley to rely on Senior Executive A’s view that the
Letter would meet the Authority’s needs. Mr Staley was the only person who
reviewed or discussed the contents of the Letter prior to it being finalised,
who was able to comment on the accuracy of the two statements from his
own personal knowledge. Senior Executive A had no first-hand knowledge of
the facts relating to the nature of the relationship between Mr Staley and Mr
Epstein, or of the frequency or extent of their contact, and was unaware of
material information relevant to the accuracy of the statements, which Mr
Staley had failed to provide to Barclays. Mr Staley was aware of this and so
must have realised that Senior Executive A’s comment that the Letter would
meet the Authority’s needs reflected their view that the form of the Letter and
the matters it addressed were suitable for Barclays’ response to the
Authority’s enquiry, and was not a comment on the factual accuracy of its
contents.
66. Mr Staley’s failure to correct the statements cannot reasonably be described
as inadvertence, carelessness or negligence. He was expressly asked to
consider whether the language used was fair and accurate, and he had the
benefit of discussing the Letter with Senior Executive A. He knew that the
statements were introduced by Senior Executive A following Board Member
A’s call with FCA Executive A on 4 October 2019 and he must therefore have
realised that they were connected to Barclays’ understanding that the Letter
would “meet the [Authority’s] needs”, which ought to have made him
particularly focus on whether they were accurate. He must have known that
the Authority would determine whether to take further action upon receipt of
the Letter: he had ample opportunity to correct the statements but did not do
so. Further, the Authority considers that the fact that Mr Staley did not
accurately set out the nature and extent of his relationship with Mr Epstein to
Barclays in October 2015, and subsequently in 2019, supports its conclusion
that Mr Staley’s approval of the Letter containing the misleading statements
was not inadvertent, careless or negligent. The Authority therefore considers
that it is reasonable and appropriate to conclude that Mr Staley acted
recklessly.
67. The Authority agrees that recklessness is not synonymous with a lack of
integrity. However, recklessness as to the truth of statements made to others
who will or may rely upon them is a well-recognised example of a lack of
integrity. In the circumstances, the Authority considers that Mr Staley’s
recklessness constitutes a lack of integrity and that he therefore failed to
comply with ICR 1.
The statement regarding the nature of Mr Staley’s relationship with Mr Epstein
68. The evidence does not support a finding that Mr Staley was aware of a risk that the
statement that he did not have a close relationship with Mr Epstein might mislead the
Authority and/or that he nonetheless chose to take that risk. Instead, it supports a
finding that Mr Staley considered the risk that the draft of the Letter provided to him
on 6 October 2019 might not address the substance of the Authority’s enquiry, as a
result of which, on Mr Staley’s initiative, he questioned the wording of the statement
in a telephone conversation with Senior Executive A, who provided him with
appropriate assurances.
69. The evidence therefore gives rise to the inference that Mr Staley approved the draft of
the Letter as a result of Senior Executive A’s advice, and that upon receiving and
accepting that advice Mr Staley did not perceive a risk that the Authority would be
misled. Further, it would be illogical to reach the conclusion that Mr Staley decided to
take the risk of misleading the Authority and/or was indifferent as to the consequences
of a risk of which he was aware, given that he had already provided Barclays with a
substantial amount of information as to his relationship with Mr Epstein in order to
permit Barclays to respond to the Authority.
70. The Authority considers that Mr Staley must have been aware of the risk that
the statement that he did not have a close relationship with Mr Epstein might
mislead the Authority. Although Senior Executive A told Mr Staley that they
considered that the draft letter would meet the Authority’s needs and that the
letter as drafted was fair, they also made it clear that Mr Staley would need
to satisfy himself of this. Mr Staley must have known that the statement that
he did not have a close relationship with Mr Epstein was inaccurate. Unlike
Senior Executive A, he knew that he had had extensive email communications
with Mr Epstein for many years before joining Barclays and that he had told
Mr Epstein on several occasions how much their relationship meant to him,
and he also knew that he had confided in Mr Epstein on significant matters
relating to Mr Staley’s career, including his potential appointment as CEO of
Barclays. Further, Mr Staley knew that he had not informed Barclays of these
matters.
71. The Authority therefore does not agree with Mr Staley’s submission that the
evidence gives rise to the inference that Mr Staley approved the draft letter
because of Senior Executive A’s advice. Given his knowledge of the nature of
his relationship with Mr Epstein, Senior Executive A’s view that the Letter as
drafted was fair could not reasonably have assured Mr Staley that there was
no risk that it could mislead the Authority. In addition, as mentioned in
paragraph 17 above, Mr Staley cannot have thought it reasonable to leave the
judgement as to the accuracy of the drafting of the Letter to Senior Executive
A, given that Senior Executive A told him “we want to be sure that you feel
that the language is fair and accurate”.
The statement that Mr Staley’s last contact with Mr Epstein was well before he joined
Barclays
72. This statement was drafted by Senior Executive A, based upon their understanding
that Mr Staley’s last meeting with Mr Epstein had been around April 2015 and that that
information was in the public domain. Mr Staley’s position, as outlined to Barclays on
many occasions, was that he had last met with Mr Epstein around April 2015 and that
he had not had any contact with Mr Epstein since joining Barclays. Senior Executive A
did not ask when Mr Staley and Mr Epstein were last in telephone or email contact and
the statement was not an attempt to identify the last time when any contact was made
between them. It would be unreasonable to conclude that Mr Staley should have raised
this, given the context and purpose of the enquiry, as understood by him and Barclays.
73. Mr Staley had not sought to conceal the fact that he had been in contact with Mr Epstein
more recently, since he had made Senior Executive B aware that as of October 2015
there had been reasonably recent contact of some form. Further, Senior Executive B
stated in interview that they would have understood the phrase “well before he joined
Barclays” to mean that Mr Staley’s last contact with Mr Epstein was prior to November
2015, which is factually correct. This supports the conclusion that Mr Staley had given
to Barclays the information that he had remained in contact with Mr Epstein until days
before his appointment was announced and undermines the Authority’s case that Mr
Staley was responsible for misleading the Authority in relation to this statement.
74. Unlike Senior Executive A, Mr Staley knew that he had been in contact with
Mr Epstein until shortly before his appointment as CEO of Barclays was
announced and just a few weeks before he started in role, and so he must
have known that the statement that they had last been in contact “well before
he joined Barclays” was inaccurate. Mr Staley must have appreciated that the
Authority would rely on this statement and that there was a risk that the
Authority would be misled. Mr Staley had the opportunity to correct this
statement and it was not reasonable for him to approve a statement that he
must have known might mislead the Authority.
75. Although Senior Executive B had the impression from their discussions with
Mr Staley in October 2015 that Mr Staley had had reasonably recent contact
with Mr Epstein, Senior Executive B was not aware that they had been in
contact in respect of Mr Staley’s potential appointment as CEO of Barclays or
in respect of the press enquiries in connection with his likely appointment in
relation to their relationship. Nor is it clear from the evidence that Senior
Executive B was aware that they had continued to be in contact until shortly
before Mr Staley’s appointment as CEO of Barclays was announced. Further,
Senior Executive B was not involved in the preparation of the Letter, was not
involved in any discussions that led to its creation and did not see the draft of
the Letter containing the statement that Mr Staley’s last contact with Mr
Epstein was “well before he joined Barclays”. In the circumstances, the
Authority concludes that Mr Staley acted recklessly in failing to correct this
statement.
Mr Staley did not breach ICR 3 or SMCR 4
76. The alleged contraventions of ICR 3 and SMCR 4 are associated, on the Authority’s
case, with the circumstances in which the draft letter of 6 October 2019 was approved.
On the Authority’s own case, inadvertence, carelessness or mere negligence is
insufficient to establish a lack of integrity and would be insufficient to establish a failure
to comply with ICR 3 or SMCR 4.
77. Mr Staley was open and cooperative with the Authority at all times and so did not
breach ICR 3. He provided Barclays with detailed and accurate information concerning
the history of his relationship with Mr Epstein, without access to emails or any other
material to aid his recollections. He was aware that that information was to be used
by Barclays for the purpose of responding to the Authority’s enquiry of 15 August 2019.
He was involved in correcting some of the drafts of the Letter and was open and
cooperative at all times with Barclays which, rather than Mr Staley, had the
responsibility of responding to the Authority.
78. Mr Staley did not fail to disclose appropriately any information about which the
Authority would reasonably expect notice and so did not breach SMCR 4. Mr Staley
was not a party to the dialogue between Barclays and the Authority, but he was aware
of the Authority’s enquiry and he provided appropriate and accurate information to
Barclays so that Barclays could formulate the necessary response. Having provided
Barclays with detailed and accurate instructions, he was entitled to assume that those
who had been involved in or were aware of the discussions that had taken place with
FCA Executive A were best placed to judge what was to be conveyed to the Authority.
79. The Authority acknowledges that Mr Staley provided Barclays with certain
information regarding his relationship with Mr Epstein. However, he did not
inform Barclays of material facts and matters, in particular those summarised
in paragraph 10 above, which demonstrate the inaccuracy of the two
statements in the Letter. Although Mr Staley did not have access to his JPM
or BlueMountain emails at the time the Letter was drafted, he must have
known that: (i) his relationship with Mr Epstein could not fairly or accurately
be described as not having been a close relationship, and (ii) he had been in
contact with Mr Epstein regarding his potential appointment as CEO of
Barclays until shortly before he was appointed to that role.
80. Mr Staley must have realised that the Authority’s request to Barclays for
information about his relationship with Mr Epstein was important to the
Authority. Although he questioned the “close relationship” wording which
had been inserted by Senior Executive A, it was not reasonable for him to
approve that wording, on the basis that Senior Executive A considered that
the letter as drafted was fair, based on what Mr Staley had told them about
the relationship. Senior Executive A told Mr Staley that he needed to satisfy
himself that the language was fair and accurate and, as would have been
obvious to Mr Staley at the time, he was the only person who reviewed or
discussed the contents of the Letter prior to it being finalised, who was able
to comment on the accuracy of the two statements from his own personal
knowledge. Mr Staley must also have realised that, although the Letter was
from Barclays, that did not obviate his responsibility to ensure that the
information contained in the Letter regarding his relationship with Mr Epstein
was accurate. Accordingly, by approving the Letter which contained the two
misleading statements without informing Barclays that the statements were
incorrect, Mr Staley failed to be open and cooperative with the Authority in
breach of ICR 3 and failed to disclose appropriately information of which the
Authority would have reasonably expected notice in breach of SMCR 4.
81. In the circumstances, it is not appropriate to impose a financial penalty on Mr Staley.
Alternatively, if it is concluded that Mr Staley acted negligently, only a moderate
financial penalty would be appropriate. The proposed penalty is grossly
disproportionate.
82. The calculation of Mr Staley’s relevant income at Step 2 of the penalty calculation is
flawed as it includes an amount in relation to unvested shares that Mr Staley was
awarded. These unvested shares have been suspended by Barclays pending further
developments in these proceedings. Since the shares have not vested and their vesting
is contractually contingent, it is not possible to conclude that the value of the unvested
shares has been ‘received’ by Mr Staley for the period in question, and so they should
not count as relevant income as defined in DEPP 6.5B.2G(1). Further, Enforcement’s
attempt to determine a value for the unvested shares is speculative and does not
proceed on a sound evidential basis. Accordingly, the calculation of Mr Staley’s
relevant income should disregard any part of the value of the unvested shares.
83. The seriousness of the breach should not be considered to be level 4. If there was any
breach by Mr Staley, its seriousness would be more appropriately fixed at level 1 or 2:
a. The Authority’s concern was to obtain an assurance that Barclays had satisfied
itself that there was no impropriety in the relationship between Mr Staley and
Mr Epstein in the light of the wider allegations against Mr Epstein. Board
Member A on behalf of Barclays was so satisfied. The Authority has made no
finding that there was any such impropriety.
b. There is no reasonable likelihood of any recurrence of the conduct in question,
as the circumstances were quite exceptional.
c. No financial benefit accrued to Mr Staley and no loss was avoided. Any breach
did not have the capacity to impact on the orderly conduct of markets or result
in any loss of confidence.
84. The previous regulatory action taken by the Authority and the PRA against Mr Staley
in 2018 should not be considered an aggravating factor at Step 3 of the penalty
calculation, as it has no relevance to this case.
85. The Authority considers that it is appropriate, and in accordance with the
Authority’s penalty policy as set out in Chapter 6 of DEPP, to impose a
financial penalty on Mr Staley in respect of his breaches of ICR 1, ICR 3 and
SMCR 4. As described in section 6 of this Notice, the Authority has calculated
the financial penalty by applying the five-step framework set out in DEPP
6.5B. The Authority does not consider the resulting penalty of £1,812,800 to
be disproportionate to the breaches, given the seriousness of the breaches
(which include acting with a lack of integrity) and the level of Mr Staley’s
relevant income.
86. The Authority considers that it is appropriate to include in the calculation of
his relevant income the deferred shares earned by Mr Staley during the
Relevant Period which have not yet vested. A person who earns deferred
shares has a reasonable appreciation of the likelihood that they will ultimately
receive them and factors that likelihood into their assessment of their
remuneration. The Authority considers that all benefits awarded for
performance in the period when the breach occurred, and which at the time
the individual in question reasonably expected to receive, should be included
in the calculation of their relevant income, including benefits to be received
in future periods.
87. As the vesting of the deferred shares awarded to Mr Staley is contingent on
achieving certain performance metrics, the vesting of the full amount of the
award is not guaranteed, and so the Authority considers their value should be
adjusted to reflect their contingent nature. The Authority considers it
reasonable to apply a contingency adjustment to the value of the deferred
shares based on the average percentage of deferred shares awarded to Mr
Staley in previous years, and so has taken that approach.
88. The Authority considers it is unrealistic to place zero value on the shares. At
the time that they were earned, it is extremely unlikely that Barclays or Mr
Staley or anyone else would have considered them to be worthless. They
formed part of Mr Staley’s remuneration package and must have had a
meaningful value. Further, Barclays has not yet made a decision in respect of
the unvested shares, and it cannot be assumed that Barclays will act in a
particular way. In any event, the possibility that Barclays will not award any
of the shares to Mr Staley, if he is found to have committed misconduct, does
not make it appropriate to attribute zero value to the shares, as that would
then make the finding of misconduct determinative of the level of relevant
income.
89. The Authority considers the seriousness of Mr Staley’s breaches to be level 4.
The Authority has taken into account the relevant factors listed in paragraphs
6.9 to 6.12 of this Notice in reaching that conclusion. The factors mentioned
by Mr Staley do not affect the Authority’s view as to the seriousness of his
breaches:
a. The Authority has made no findings at all as to whether Mr Staley saw,
or was aware of, any of Mr Epstein’s alleged crimes. That is beyond the
ambit of this case, which is concerned with the factual accuracy of
statements made to the Authority regarding the nature and recency of
Mr Staley’s relationship with Mr Epstein.
b. The
Authority
does
not
agree
that
these
were
exceptional
circumstances, such that there is no reasonable likelihood of any
recurrence of the misconduct. The circumstances in question required
Mr Staley, as the CEO of Barclays, to ensure that information provided
by Barclays to the Authority was accurate and not misleading. Mr
Staley’s failure to ensure the Letter was accurate and not misleading
raises concerns about his judgement and candour when communicating
with the Authority.
c. The fact that no profits were made, or losses avoided, either directly or
indirectly as a result of Mr Staley’s actions, is a factor mentioned in
paragraph 6.12 of this Notice. The Authority does not consider the
impact of Mr Staley’s breaches on the markets to be a relevant factor
in this case, but is of the view that a failure by a CEO of a major bank
to act with integrity or to be open and cooperative with the Authority
does have the potential to adversely affect confidence in the markets.
90. The Authority does not agree that the regulatory action taken by the Authority
and the PRA against Mr Staley in 2018 has no relevance to this case. Mr
Staley’s reckless failure to correct the misleading statements in the Letter
occurred only a year after that regulatory action which, like this case, involved
a failure of judgement by Mr Staley. As a consequence of that regulatory
action, the Authority would have expected Mr Staley to have been particularly
careful to ensure that the Letter was factually accurate. That it is appropriate
to regard the previous regulatory action taken against Mr Staley as an
aggravating factor is also consistent with DEPP 6.5B.3G, which includes “(i)
the previous disciplinary record and general compliance history of the
individual” among a list of factors which may have the effect of aggravating
or mitigating the breach.
91. As Mr Staley did not act with a lack of integrity, he does not lack fitness and propriety
and so it is disproportionate to impose a prohibition order on him and there can be no
justification for doing so. Further, Mr Staley’s successful record as CEO of Barclays
illustrates his competence and personal characteristics, including his integrity, and
demonstrates his fitness and propriety. His achievements as CEO also support the
conclusion that it is inherently unlikely that he would have conducted himself recklessly
with regard to the accuracy of information which was to be provided to the Authority.
92. The Authority considers that Mr Staley is not a fit and proper person to
perform the role of a CEO or other senior management function, and that it is
appropriate and proportionate to prohibit Mr Staley from performing any
senior management or senior influence function in relation to any regulated
activity carried on by an authorised person, exempt person or exempt
professional firm, for the reasons set out in paragraphs 6.27 to 6.33 of this
Notice. The Authority notes Mr Staley’s submissions regarding his record as
CEO but considers that the evidence supports its conclusion that he acted
recklessly and with a lack of integrity.