The UK Financial Conduct Authority (FCA) has won a protracted legal battle with a former JPMorgan trader caught up in the ‘London Whale’ controversy who had argued that the watchdog didn’t take adequate steps to maintain his anonymity when it fined the Wall Street bank $195 million in 2013.
In a ruling that could prove important for other cases brought against the regulator, the Supreme Court said that the FCA adequately anonymized Julien Grout’s identity and had not provided information that would have made him identifiable to the general public. The judgement overturned previous rulings from a London tribunal.
Back in 2016, Mr. Grout sued the FCA after claiming to be improperly identified in a report on the overarching scandal. In that instance, the FCA had failed to properly anonymize Julien Grout in a penalty notice accompanying a £138 million fine against the lender.
For years the FCA did not provide names of third-party individuals in its notices, instead using monikers such as “Trader A”, as the regulator gives them the opportunity to respond to the allegations. Mr. Grout had argued that he was recognisable from the label given to him by the FCA because he was one of four members working on the bank’s synthetic credit portfolio.
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However, Judge Andrew Longmore said today that he “cannot accept that the phrase ‘the traders on the SCP’ is a synonym for Mr. Grout,” adding: “It is so deliberately vague that it can legitimately be described as ‘anonymous’ rather than ‘synonymous.’”
It is a significant ruling because other traders are suing the regulator over the issue of identification.
Earlier in August, the US Securities and Exchange Commission (SEC) dropped its case against Grout and another former JPMorgan trader, which alleged that they conspired with other executives to hide the trading scandal that lost the bank $6.2 billion.
The decision to dismiss the civil claims against Javier Martin-Artajo and Julien Grout wraps up a five-year investigation by the US Department of Justice, also abandoned its criminal charges against both men.
The authorities decided not to pursue the charges after it determined that it can no longer rely on the testimony of the former JP Morgan trader Bruno Iksil, who was nicknamed ‘the London Whale’.