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Jes Staley, the former Barclays boss, has received the first regulatory ban for actions taken as chief executive of a major UK bank after he allegedly misled the watchdog about his past relationship with Jeffrey Epstein.
The UK Financial Conduct Authority said on Thursday it would ban Staley from holding senior positions in financial services, and fine him £1.8mn, for “recklessly approving . . . two misleading statements about the nature of his relationship” with deceased sex offender Epstein, with whom he had close ties during his time at JPMorgan Chase, before he joined the UK lender.
Barclays said in light of the FCA decision, Staley would have to forfeit as much as £17.8mn in deferred bonuses that it had frozen.
“A CEO needs to exercise sound judgment and set an example to staff at their firm. Mr Staley failed to do this,” the FCA said in a statement. “We consider that he misled both the FCA and the Barclays board about the nature of his relationship with Mr Epstein.”
Banking supervisors concluded that “we cannot rely on him to act with integrity by disclosing uncomfortable truths about his close personal relationship with Mr Epstein”.
Staley said he was “disappointed” by the FCA decision and that he would appeal against it. He has referred the case to the Upper Tribunal, which is overseen by an independent judge and hears challenges to FCA penalties.
“If I had known who Jeffrey Epstein really was, there is absolutely no doubt that I wouldn’t be in the position I am in today,” Staley said in a statement. “Prior to undertaking my former role, it was known that I had had a relationship with Epstein.”
The FCA will now have to prove its case at the Upper Tribunal, which has previously overturned regulatory bans of individuals.
Sara George, a lawyer at Sidley Austin, said the FCA “has to prove Mr Staley is not fit and proper. He does not have to prove that he is.”
The action is the second time that Staley’s fitness to run the British lender has been questioned under the UK’s senior managers regime, which was introduced in 2016 to hold executives personally accountable for failings.
He was criticised and fined £642,000 in 2018 after he repeatedly tried to identify a whistleblower, against the advice of colleagues and in breach of the bank’s rules.
Barclays’ shares closed down 3 per cent to on Thursday.
Epstein was until 2013 a key client of JPMorgan’s private bank, which Staley used to run, and the pair developed a close relationship. Staley visited Epstein in Florida in 2009 as the latter was on work release during his jail sentence for procuring a child for prostitution. Staley then made numerous other trips to Epstein’s properties, including sailing to the sex offender’s private Caribbean island with his family in 2015 shortly before joining Barclays.
While aware of Staley’s connection to Epstein when he was appointed to lead the UK lender, the FCA and Bank of England’s Prudential Regulation Authority opened a formal probe after media reports about Epstein’s alleged crimes and after receiving an email cache from US regulators in 2019.
Staley stepped down in November 2021 to contest the allegations after Barclays was shown the preliminary findings of the investigation.
The Financial Times reported the same month that when at JPMorgan, Staley exchanged 1,200 emails with Epstein between 2008 to 2012, with content that included unexplained terms, such as “snow white”.
In February of this year, a lawsuit filed by the US Virgin Islands against JPMorgan revealed the full text of the emails, in which Staley told Epstein: “I deeply appreciate our friendship. I have few so profound.”
The FCA cited this email as evidence that Staley had misled Barclays’ board into writing a letter that “claimed that Mr Staley did not have a close relationship with Mr Epstein”.
Contrary to a statement in the letter that Staley had ceased all contact with Epstein prior to joining Barclays, “Mr Staley was in fact in contact with Mr Epstein in the days leading up to his appointment as CEO being announced on 28 October 2015”, the FCA said on Thursday.
The PRA said in a separate statement: “We support the FCA’s decision announced today against Jes Staley. It is imperative that senior managers act with integrity and are open and co-operative with the regulators.”
This article has been amended to clarify Staley’s visit to Epstein in Florida