I’ve blogged before about the risk of collateral damage to reputation for individuals caught up in regulatory enforcement activity involving their employers. Now a new and successful challenge has been made by a manager of a major investment bank against another Financial Conduct Authority Final Notice.
In this case Mr Bittar claimed that disguised references to him in the FCA publication such as “Manager B” nevertheless enabled people in the industry to identify him in circumstances where he had not been given rights under Section 393 of the Financial Services and Markets Act 2000 to make representations about his personal position.
The Case at Issue
The facts are, briefly, that in April 2015, the FCA had agreed to an eye-watering penalty of nearly £227 million with Deutsche Bank as a result of misconduct by the bank through its attempted manipulation of LIBOR.
Mr Bittar was a former employee of the bank, holding the position of manager of the money markets derivatives (“MMD”) desk in London during the relevant period.
No charges have been brought against Mr Bittar, although he still faces the prospect of a penalty notice from the FCA. His complaint was that the FCA Final Notice and related documents were prejudicial to his position and enabled others to identify him.
How the Tribunal Came to its Decision
Unsurprisingly the Tribunal applied the same test as laid down recently by the Court of Appeal in the Macris case, namely:
“Are the words used …such as would reasonably in the circumstances lead persons acquainted with the claimant / third party, or who operate in his area of the financial services industry, and therefore would have the requisite specialist knowledge of the relevant circumstances, to believe …that he is a person prejudicially affected by matters stated in the reasons contained in the notice?”
Having reviewed the Final Notice in detail and the context in which the references to “manager B” were made, The Tribunal had no difficulty concluding that:
“… it is inevitable that the relevant reader, knowing that Mr Bittar was a London desk head and that the desk of which he was the head at the relevant time was the Money Market Derivatives desk, would conclude that Manager B could not be anyone other than Mr Bittar.”
The FCA’s Dilemma
Well, that seems clear enough. But as I said in my earlier blog, this is a big deal for the FCA. They are in danger of being forced into an uncomfortably tight space between either pursuing full-blown enforcement actions against individuals or issuing notices to the entity alone which are so deprived of color and context (for fear of identifying individuals) that they lack the very punch and deterrent effect which the FCA is looking for.
An indication that this battle is not yet over is that the FCA has just won its right to appeal to the Supreme Court against the original Court of Appeal judgment in the Macris case on the basis of which this new decision comes. One to watch in 2016 I think.