New York regulators fined Barclays Bank $15 million after investigations on both sides of the Atlantic determined that CEO Jes Staley broke the law by attempting to learn the identity of a bank whistleblower.
The New York Department of Financial Services (DFS) announced the fine Dec. 18, saying it was tied to Mr. Staley’s attempts to unmask the author of two whistleblower letters criticizing the CEO’s hiring of a longtime associate for the job of head of Barclay’s financial institutions group.
According to Bloomberg, Barclays’ whistleblower scandal started in June 2016, when the bank’s board received an anonymous letter from a whistleblower raising concerns over the hiring of Tim Main, one of Mr. Staley’s former colleagues at JPMorgan Chase & Co. The whistleblower pointed out “issues of a personal nature” between Mr. Staley and Mr. Main influencing the hire, as Bloomberg put it.
Mr. Staley persisted in trying to learn the identity of the whistleblower who penned the letters against the advice of other Barclays executives, including bank’s chief compliance officer and the general counsel. According to the Wall Street Journal, Mr. Staley was driven to uncover the whistleblower’s identity to shield Mr. Main from attack and criticism.
The DFS investigation found that shortcomings in governance, controls, and corporate culture relating to Barclays’ whistleblowing function allowed a sequence of events that potentially could have had a damaging impact on the effectiveness of the bank’s whistleblowing program.
“Whistleblowers are vital to uncovering and addressing intentional wrongdoing. DFS’s thorough investigation uncovered actions at the top that exposed the bank to risk and created an atmosphere in which employees might doubt that it was safe to escalate issues of concern to the bank,” said Superintendent Maria Vullo.
The investigation echoes the findings of a similar probe by UK regulators, who asserted Mr. Staley had a “serious error in judgement” by trying to uncover the identity of the whistleblower who wrote the letters. Mr. Staley admitted his errors and apologized earlier this year and was fined £642,430 ($868,501). Barclays also penalized Mr. Staley by reducing his 2016 bonus by £500,000.
In addition to the $15 million fine, Barclays entered a consent order with DFS that requires it, among other things, to provide a plan detailing how it will ensure the implementation of its whistleblower program and improve the board’s oversight of it. The DFS also gave the bank a March 31 deadline to report all other instances in which the bank sought to expose or retaliate against a whistleblower since Jan. 1, 2017.