Whatever Achilles might say, this is no pyrrhic victory for the City watchdog
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Version 0 of 1. Achilles Macris has plenty of front. The former JP Morgan banker has sought to claim that a £793,000 fine –the fifth-largest individual penalty levied in a non-market abuse case – represents “a major climbdown” by the Financial Conduct Authority (FCA). It is almost as if his virtually invulnerable namesake were to say “nya, nya, you missed” after being hit in the heel by an arrow – the one part of him, in classical mythology, that could be harmed. But first some background. As head of JP Morgan’s Chief Investment Office (CIO) in London, Mr Macris was responsible for a number of portfolios including one containing “synthetic credit” – the horribly complicated derivatives that have caused all sorts of problems. This particular portfolio became infamous as a result of the “London Whale” trades that racked up losses of $6.2bn (£4.3bn) for JP Morgan and led to it paying heavy fines on both sides of the Atlantic. Mr Macris has been involved in a lengthy dispute with UK regulators over the communications issued when those fines were levied. He argues that the FCA’s predecessor, the Financial Services Authority, identified him when it made some rather pointed criticisms of the CIO and its people upon levying the fine. He won rounds one and two, but a final verdict from the Supreme Court is still pending. None of which changes the fact that he has agreed to a thumping penalty, and at an early stage in the process. That arrow may not have been a killer. He was not, as he has been at pains to point out, found to have deliberately misled the regulator. But in its decision notice, the regulator still says that he failed to correct “a misleading impression” as to the state of the portfolio and that he was not “open and co-operative” with the regulator. So it is hard to see how he can claim this as a “major climbdown”, as he has in a lengthy statement. City workers have ample opportunity to challenge the regulator’s decisions. They can be taken to the independent regulatory decisions committee and then to an appeals tribunal. Mr Macris has done neither. The only query I have about this case is why the penalty was reduced by the 30 per cent available for settling at the earliest opportunity – when he would usually have only qualified for 20 per cent based on where the case had got to. The watchdog says it did this on the basis of “new information”, without providing any explanation. Its sensitivity is understandable, given the lengthy battle with Mr Macris over communications, but it won’t do much for public confidence in the regulatory system and leads one to suspect it might have fouled up somewhere. But that’s a side issue and neither it, nor Mr Macris’s whingeing, should detract from the central point: a banker has finally been brought to book over their role in a scandal. That is a rare and welcome development, and the FCA shouldn’t shy away from bringing future cases. |