Details of Staley Allegations Are Revealed, Then Deleted, by DFS
(Bloomberg) -- New York regulators, who fined Barclays Plc $15 million for whistle-blowing violations, released a previously unreported allegation about Chief Executive Officer Jes Staley -- and then removed some of that material from a subsequent statement.
The New York Department of Financial Services wrapped up the case Tuesday. It cited a whistle-blower in the incident as saying Staley’s former employer -- JPMorgan Chase & Co. -- removed Staley from management because of how he dealt with an executive who was a personal friend. Staley eventually recruited that banker to Barclays.
About three hours later, the DFS changed its online statement, removing the purported circumstances of Staley’s departure from JPMorgan. His exit from the Wall Street firm -- and the specifics of any clash he may have had with JPMorgan CEO Jamie Dimon -- have been subject to speculation for years. His efforts to protect the executive -- Tim Main -- have been controversial as well.
Spokesmen for JPMorgan, Barclays and the DFS declined to comment.
The whistle-blower scandal has been a source of embarrassment to Staley, who kept his job after a British probe of the matter earlier this year but paid a personal fine to U.K. regulators. The CEO repeatedly and improperly attempted to unmask the identity of whoever sent letters to members of Barclays’s board and another executive in 2016.
Barclays recruited Staley to move to London and become CEO in 2015, but the American-born executive made his name after decades at JPMorgan. He was once head of corporate and investment banking at the Wall Street firm and had been viewed as a candidate to succeed Dimon as CEO.
Staley told an interviewer for a magazine profile in 2010 that he would leave after a few years if Dimon didn’t step aside.
In 2013, Staley left JPMorgan for BlueMountain Capital Management. That followed a reshuffle at the bank in 2012: he was stripped of all day-to-day management duties and passed over for promotion in the aftermath of the London Whale scandal, which saw the bank grapple with the aftermath of wrong-way bets. Staley wasn’t in charge of the unit where the London Whale loss occurred.
At Barclays, Staley’s whistle-blowing scandal was revealed last year. One of the anonymous letters in question, written in 2016, raised concerns about Staley’s recruitment of one of his former colleagues at JPMorgan: Tim Main. After learning about the matter, Staley twice attempted to identify the whistle-blower, despite being informed that it was inappropriate for him to do so.
The whistle-blower “alleged Mr. Staley had been removed from his management position at his previous employer because of Mr. Staley’s knowledge of and role in dealing with the new executive when both worked at the other bank,” the DFS initially wrote, in language that was subsequently removed.
The New York regulator’s statement now says, in its own assessment, that Staley probably wanted to protect the new executive, who it didn’t name, from a “personal attack.” However, in earlier language that was absent from the DFS’s second version of its statement, the DFS had said Staley wanted to protect him from “unwanted and unfair publicity.”
The original statement also said Staley sought to maintain his own ability as CEO to recruit high-level hires “of his choosing.” The latter three words were subsequently removed.
The whistle-blower flagged issues of a personal nature regarding Main and Staley’s role in dealing with those concerns at JPMorgan.
Main was brought in as a top banker, chairing the firm’s global financial institutions group, or FIG. Staley has hired several JPMorgan veterans as he’s sought to rebuild the British company’s investment bank.
According to the DFS, the second anonymous letter purported to be from a “group of ‘concerned’ Barclays executives” in FIG who questioned the new executive’s fitness for the role.
In May, Staley was fined 642,430 pounds ($813,637) by British regulators, about 10 percent of his annual income.
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