Enforcement Watch

FCA levies fines on Achilles Macris

FCA levies fines on Achilles Macris

9 February 2016

In February, the FCA issued a Final Notice against Achilles Macris, former head of JP Morgan’s CIO[1] International, imposing a fine of £792,900 in relation to his failure to disclose certain information arising from the “London Whale” trading in 2012.

The FCA found that, in breach of Principle 4 (dealing with the regulators in an open and cooperative way), Mr Macris had failed to inform the FSA about various concerns related to the trading in the Synthetic Credit Portfolio (SCP) and had thus failed to disclose appropriately any information “of which the Authority would reasonably expect notice”.

At the relevant time, JP Morgan Chase was the subject of a "close and continuous" supervisory relationship which meant that the firm had been identified by the FCA “as carrying a high probability of risk and a high impact to the Authority’s statutory objectives, therefore requiring close and continuous monitoring”. As part of this, Mr Macris, who was the main FSA contact for information about CIO International, had attended a supervision meeting with the FSA on 28 March 2012. At that meeting, he explained both positive and negative developments, including that the SCP had made a loss of $200m. However, he did not at the meeting or afterwards provide the FSA with an update covering the full extent of the difficulties that the SCP was facing. Then, on 29 April 2012, on a call with the FCA instigated by the firm following news of the "London Whale" in the press, Mr Macris was found to have reassured the FCA about the relevant trades while, again, failing to disclose then or afterwards his knowledge of the wider context.

The fine was calculated on the basis of 20% of Mr Macris’ £6.3m salary for the period of the breach, reduced by 10% on the basis that his benefits were clawed back on his termination, and then reduced by a settlement discount of 30%.

You can read the Final Notice here.


The primary interest for lawyers following the Macris case had been his previous application for third party rights in respect of the JP Morgan Notice. He was successful on that matter in the Court of Appeal (see Enforcement Watch 16 "19 May 2015: Court of Appeal determines identification issue"). The interpretation of the legislation by the Court of Appeal is causing some real issues, and the FCA has been granted permission to appeal the decision to the Supreme Court. Watch this space.

Nevertheless, this Final Notice does itself give rise to a number of interesting aspects:

  • It provides some insight into the degree of openness required of SIFs for the purposes of Principle 4. While it appears that other senior employees were present at the material meeting, Mr Macris was targeted as the Firm’s “most senior representative”. While the FCA includes in the Final Notice examples of specific matters that Macris failed to disclose, the focus of the FCA’s criticism appears to be the overall impression he gave (which was overly favourable). A repeated refrain, for example, is along the lines of the following: “Even a high level and generalised indication from Mr Macris (as the SIF and senior Firm representative at the Meeting) that there were causes for concern with the SCP would have provided the Authority with the opportunity to follow up with questions about the nature of the concerns.”
  • The Notice should be keenly read by those who are Senior Managers under the new SMR. In one respect, the personal obligation on Senior Managers to be "open and co-operative" is plainly not new.  In another, as those held personally responsible for a certain aspect of a firm's business, they will be all too aware of how they could come in for criticism for failure to disclose. It is not difficult to see how SMs may at times want to take a more inclusive approach to disclosure than firms. They should also be aware of references in the Notice to how, if Macris had disclosed certain matters in the meeting and then the call, it "would have provided leadership" to other staff participating in them to be open and co-operative in providing information in relation to their specific areas of expertise.
  • There are clues that this was a hard fought and negotiated Notice. For example, the Notice includes a reference that the Authority recognises that the 29 April call was "arranged for a specific purpose, took place on a difficult day for all concerned with the SCP at the Firm and was of short duration", which has all the hallmarks of being insisted on by Macris.
  • A further clue to this being a hard fought and negotiated Notice, but which is also interesting in its own right, is the issue of the settlement discount. Macris was given a 30% settlement discount despite settling only at stage 2 (which would ordinarily attract a 20% discount). The reason given for this was that it was an exceptional case in which the nature and seriousness of the case had changed substantially and that a settlement would have been possible at an earlier stage if it had been initially instigated on that different footing. We can only guess at why the case changed so much. Nevertheless, this is a useful argument on discount for subjects to keep in mind.