According to the news report by Bloomberg, the Chief Executive Officer of Barclays Bank, Jes Staley was penalized £642,430 (or $870,557) by regulators in the UK for trying to uncover a whistleblower.
This controversy goes back to June of 2016, when the bank’s board got an anonymous letter that raised concerns about the hiring of Tim Main, one of Staley’s ex-colleagues from JP Morgan Chase & Co. The letter revealed personal issues with regard to Staley’s and Main’s role in dealing with certain concerns in JP Morgan.
After he found out about the letter, Staley tried to find out who the whistleblower was – twice – despite being told that his conduct with regard to the whistleblower was inappropriate. The Barclays’ board conducted its own investigation into Staley’s actions, and reached a conclusion that Staley had honestly believed he had done nothing wrong.
Staley then agreed to a settlement in the early stages of the investigations, which qualified him for a 30% reduction in the total FCA as well as PRA (Prudential Regulatory Authority) fine.
The Financial Conduct Authority’s executive director of enforcement and market oversight, Mark Steward stated that Staley had been found guilty of breaching the standard of care that was required and expected of a Chief Executive Officer as he risked compromising confidence in his bank’s whistleblowing processes. Steward said that whistleblowers were critical to exposing weak or poor practices as well as misconduct in financial services companies and their anonymity therefore needed to be protected completely.
The fine slapped on Staley is the third largest ever imposed by the Financial Conduct Authority on any individual. The FCA stated last month that while it was fining the CEO of Barclays, it would stop short of accusing him of having acted without integrity. Had the regulator done that, Staley would have lost his job.
The FCA and the PRA, did, however, state that Barclay’s whistleblower policies and systems would now be subject to more intense scrutiny as well as monitoring. This is the first time such measures have been levied on a financial institution.
This whistleblower scandal has been the first test of the Senior Managers and Certification Regime run by the FCA. This regime requires officials to be personally accountable for any misconduct that takes place under their watch. Since misconduct and scandals were at the heart of what led to the financial crisis, the FCA and other government regulators have placed a great deal of importance to the whistleblower program. Thus, the protection of those raising alarms of problems within a financial institution has been put on highest priority by them.
Compliance experts are debating whether the CEO got away lightly for what he did. According to the professor of governance at the Copenhagen Business School, Tom Kirchmaier, in terms of the amount he was fined, Staley actually did get away very lightly. Kirchmaier stated that as CEO, Staley would have known what he was doing was wrong and so this fine is a very weak warning.
According to data compiled by Bloomberg, the fine levied on Staley is barely 15% of his reported salary in 2016. The bank released a separate statement, announcing that it had cut £500,000 from the CEO’s 2016 bonus payout. Staley himself stated that he admitted that his handling of the situation had been incorrect.
Compliance experts aren’t the only ones who are not satisfied by the punishment meted out to Staley. UK Lawmaker and chairman of the Parliamentary Treasury Committee, Nicky Morgan, a CEO needs to clearly lead by example. And Staley clearly failed in this aspect of his job. The Lawmaker stated he was going to ask why the FCA believes that this fine is acceptable punishment.