Barclays CEO Is Probed Over Bid to Unmask Whistleblower -- 4th Update
April 10 2017 - 10:55AM
Dow Jones News
By Max Colchester
LONDON--U.K. and U.S. regulators have begun an investigation
into Barclays PLC Chief Executive Jes Staley over his attempts to
unmask a whistleblower who raised questions about one of the bank's
top hires.
The U.K.'s Prudential Regulation Authority and Financial Conduct
Authority are probing both Mr. Staley and the bank over its
treatment of whistleblowers after Mr. Staley tried to identify the
source of an anonymous letter that criticized the new hire and Mr.
Staley's previous dealings with him, Barclays said in a statement
Monday. The bank added that it had issued a formal reprimand to Mr.
Staley and would make a "significant" cut to his bonus. It is also
conducting its own review into Barclays's controls.
The New York State Department of Financial Services, which
regulates Barclays in the U.S., is also investigating the matter,
according to a person familiar with the probe.
The hire in question was Tim Main, who was brought in from
Evercore Partners to run Barclays's financial institutions group,
according to a person familiar with the matter. Mr. Main had
previously worked with Mr. Staley at J.P. Morgan Chase & Co. He
declined to comment.
"I have apologized to the Barclays board, and accepted its
conclusion that my personal actions in this matter were errors on
my part," Mr. Staley said in a statement.
In June 2016, Barclays's board and a senior executive received
anonymous letters raising "concerns of a personal nature" about Mr.
Main, as well as Mr. Staley's "knowledge of and role in dealing
with those issues at a previous employer," the bank said. Mr.
Staley initially asked Barclays's internal security team to try to
identify the authors of the letters, believing them to be an
"unfair personal attack," the bank said. He was told that it wasn't
appropriate to do so. But in July he followed up on the request,
and the security team asked a U.S. law-enforcement agency to try to
help. The whistleblower's identity was never revealed, the bank
says.
A Barclays employee flagged the matter to the bank's board in
early 2017. The board then commissioned its own probe and shared
its findings with the U.K. regulators. Barclays said an internal
investigation into Mr. Staley's actions concluded that he honestly,
but mistakenly, believed that it was permissible to identify the
author of the letter.
The probe is expected to take several months, according to
people familiar with the matter. Punishments could range from a
verbal warning to Mr. Staley's being barred from undertaking
regulated activity, a step that would prevent him from remaining
CEO. Barclays's board will await the regulators' findings before
docking a chunk of his 2017 bonus. Last year, Mr. Staley was paid
GBP4.2 million ($5.2 million).
The issue is another stumble for Barclays as it tries to
overhaul its image after years of scandals. Mr. Staley has
trumpeted the bank's values and brought in executives to upgrade
its controls. "This latest revelation represents a very significant
embarrassment for the board as it tries to rebuild the group's
reputation," said Gary Greenwood, an analyst at Shore Capital.
Since his arrival in late 2015, Mr. Staley has refreshed the
bank's management team, bringing in a series of new executives.
Many of them were from his alma mater, J.P. Morgan. He has replaced
the bank's chief risk officer, chief operating officer and the head
of the lender's investment bank. Some within Barclays have grumbled
that Mr. Staley wasn't giving insiders a fair chance and was
leaning too heavily on J.P. Morgan, where he spent over three
decades, holding a portfolio of roles including running its
investment bank.
Mr. Staley left J.P. Morgan in 2013 after a management
reshuffle. He joined BlueMountain Capital, a hedge fund that had
profited a year earlier from the "London whale" debacle, which left
J.P. Morgan with more than $6 billion in losses.
Barclays investors have warmed to Mr. Staley's plan to reinforce
Barclays's investment banking franchise and refocus the lender on
its U.S. and U.K. operations. The bank's share price has risen 43%
this year.
Barclays Chairman John McFarlane said in a statement that he is
"personally very disappointed" in Mr. Staley, but the board
nonetheless said it supports his reappointment at the bank's annual
shareholder meeting next month.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
April 10, 2017 10:40 ET (14:40 GMT)
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