(Bloomberg) -- A former JPMorgan Chase & Co. trader wasn't improperly identified by the U.K. markets regulator in its settlement report over the London Whale scandal, a court ruled, upholding a Supreme Court decision on the wider issue last year.
The Financial Conduct Authority adequately anonymized Julien Grout's identity in its 138 million-pound ($195 million) London Whale settlement with the bank in 2013, a three-judge panel said Wednesday. The judgment draws a line under the question of how individuals are referred to by the FCA in penalty notices and overturns a 2016 lower court decision in favor of Grout, who was one of four members working on the bank's synthetic credit portfolio.
“I cannot accept that the phrase ‘the traders on the SCP' is a synonym for Mr. Grout,” said Judge Andrew Longmore, who wrote the ruling. “It is so deliberately vague that it can legitimately be described as ‘anonymous' rather than ‘synonymous.' ”
For years the FCA used monikers such as “Trader A” in settlement notices with firms to get around a requirement that a person must be given the chance to respond to allegations if they were identified. The anonymity allowed the agency to illustrate misconduct by publishing an account of events and transcripts of chats while avoiding any delay in issuing the sanction.
But the FCA faced a number of claims from traders in recent years who said the regulator had failed to properly anonymize them or give them a chance to respond to allegations. In a big win for the regulator, the U.K. Supreme Court said in March that a person was only identified if the general public at large could decipher who they were, not just banking peers, which led to every trader except Grout dropping their claim.
Grout contended that he could be identified because of the small number of traders on the SCP.
JPMorgan was fined more than $1 billion by U.S. and U.K. regulators in 2013 after Grout's boss, Bruno Iksil, nicknamed the London Whale for his large bets, incurred $6.2 billion in losses at the lender. The U.K. Supreme Court case related to another former JPMorgan executive, Achilles Macris, who also claimed he was wrongly identified in the London Whale notice.
Despite the Supreme Court ruling, the FCA's enforcement head Mark Steward said in an interview with Bloomberg last year that the regulator was changing its approach and planning to reach conclusions on individuals and their employers concurrently, allowing it for the first time to identify traders by name in company-penalty notices.
To contact the reporter on this story: Suzi Ring in London at sring5@bloomberg.net.
To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser, Peter Chapman
©2018 Bloomberg L.P.
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