03 May 2017


In 2013, the Financial Conduct Authority (FCA) issued Warning, Decision and Final Notices on the same day against JP Morgan Chase Bank NA (the "Bank") following the "London Whale" scandal. The Bank had entered into a series of derivative transactions involving credit default swaps as part of its hedging strategy, which resulted in an estimated trading loss of US$2 billion. The FCA eventually fined the Bank £137.6 million.

The Final Notice included the statement "… (by virtue of the conduct of the CIO London management) the Authority was deliberately misled by the Firm".

The claimant in this case, Mr Macris, headed the Chief Investment Office International department at the Bank. He claimed that the statements in the Final Notice about "CIO London management" identified him and were prejudicial to him.

ss.393 and 394 FSMA give rights to any party other than the subject of the investigation/enforcement who is identified in a notice if the notice is prejudicial to that party (known as “third party rights”). Under s.393, the third party must be given the notice before publication and have the opportunity to make representations.

Mr Macris had not been given third party rights. He referred the matter to the Upper Tribunal of the Tax and Chancery Chamber, arguing that the FCA had acted in breach of s.393.

Both the Upper Tribunal of the Tax and Chancery Chamber and (on appeal by the FCA) the Court of Appeal found in Mr Macris' favour. The FCA appealed to the Supreme Court.

The Supreme Court's judgment

The key issues were: (i) the meaning of "identifies"; and (ii) whether, on that basis, Mr Macris could be identified from the phrase "CIO London management".

The Supreme Court, by a majority of 4-1, allowed the FCA's appeal. 

Lord Sumption gave the leading judgment. The definition of "identifies" is dealt with at paragraph 11 of the judgment:

  • a person in a notice can be identified by either his "name or by a synonym…such as his office or job title"
  • if a synonym is used then "it must be apparent from the notice itself that it could apply to only one person…[who] must be identifiable from information which is either in the notice or publicly available elsewhere"
  • one can only look at information available from sources other than the notice if it is to help interpret the notice and not to supplement "the language of the notice".

Using this test Lord Sumption held that Mr Macris had not been identified in the Final Notice. At paragraph 17, he stated that, applying the above test no "reasonable member of the public without extrinsic information" would have known that the term "CIO London Management" referred to Mr Macris. 

Lord Mance and Lord Wilson both took a different approach on the test, based on the view that "identifies" needed to take account of public information readily available in the relevant market. They each also came to differing conclusions as to whether Mr Macris had in fact been identified: Lord Mance concluded that he had not.


The case highlights the competing interests of the Regulator, firms and individuals. The FCA will wish to bring its investigations and enforcement proceedings to a swift close in the interests of efficiency. The firm under investigation will often want the same. The interests of the individual, however, will generally be in protecting himself from damage caused by having been identified in a prejudicial fashion in the notice.

Where third party rights are given and exercised to review the notice and make representations, the time and cost of the investigation will inevitably increase.

The judgment is relevant to the Senior Managers and Certification Regime which has applied to banks for over a year and is in the process on being rolled out more widely. Under this regime, Senior Managers at authorised firms have a duty of responsibility for business areas allocated to them.

If the Supreme Court had upheld the decision of the Tribunal and Court of Appeal, it would have had consequences for the FCA’s drafting of notices against firms in cases where senior management are also at fault. The Regulator would have had to choose between the following two options:

  • detailing the causes of the firm’s breaches (including the conduct of the relevant manager(s)) and then granting third party rights (with attendant delays and additional costs), or
  • limiting the way it could draft notices against firms where senior management had been a contributory factor to the firm's conduct breaches.

The Regulator will be happy that it will have some greater latitude in the drafting of Notices against firms where there is some involvement of individuals in the failure within the firm. Individuals will be concerned about the possible impact on their reputation from statements they consider are prejudicial to them and potentially their future career or livelihood.

Key contact


Suzanne Padmore Partner

  • Pensions Disputes
  • Professional Negligence
  • Financial services Disputes and Enforcement 

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