The FCA published a Final Notice on 30 November 2022 against Julius Baer International Limited (JBI), an investment advisory and wealth management firm. It fined JBI just over £18m for breaches of Principles 1, 3 and 11 between March 2007 and March 2014. The financial penalty was subject to a discount because JBI settled the matter. Without that discount, the financial penalty would have been just under £24.5m.
JBI admitted that it had failed to conduct its business with integrity, failed to take reasonable care to organise and control its affairs and failed to be open and cooperative with the FCA. The underlying facts concerned a finder's arrangements between Bank Julius Baer and an employee at the Yukos Group, which it is said resulted in the employee being paid approximately $3 million as a commission.
Also on 30 November 2022, the FCA published Decision Notices in respect of three individuals, each of whom was involved to a greater or lesser extent with the matters that gave rise to the JBI Final Notice. Each of the individuals referred their Decision Notice to the Tribunal for determination. They are yet to be finally determined.
The JBI Final Notice clearly identifies and prejudices the three individuals who have referred their Decision Notices to the Tribunal. Further, on publication, Mark Steward (FCA Executive Director of Enforcement and Market Oversight) stated: "There were obvious signs that the relationships here were corrupt, which senior individuals saw and ignored." The result is that there is now on the record a Final Notice, agreed to by the bank, which makes criticism of the individuals. That Final Notice cannot now be undone.
However, as the three individuals are having their cases determined by the Tribunal, one possible outcome is that the criticisms are determined very differently by the Tribunal, and in the individuals' favour. Were that to happen, even though there would be a Tribunal finding in their favour, the FCA criticisms of them in the JBI Final Notice would remain a matter of public record.
Ordinarily, when a person is "identified" and "prejudiced" in a relevant FCA Notice, statute gives that person third party rights to participate. However, that does not apply where, as in this case, the individuals have received their own Notices. The rationale for this is obvious, as it would involve unnecessary duplication. The problem with it however is that does not in reality accommodate the position where the Notices are determined at different speeds.
In order to try to mitigate against this potential unfairness to the three individuals in this case, the JBI Final Notice is accompanied by text, not dissimilar to that which typically accompanies a Decision Notice where a reference to the Tribunal has been made. It makes it clear that:
- The JBI Final Notice has not been the subject of any judicial finding
- The JBI Final Notice includes criticisms of the three individuals, who have each received a Decision Notice in relation to those criticisms
- The three individuals "dispute many of the facts and the characterisation of their actions in this Final Notice"
- The three individuals have referred their Decision Notices to the Tribunal
- The Tribunal will determine whether to dismiss the respective references made by the individuals, or remit them to the FCA with a direction to reconsider and reach a decision in accordance with the findings of the Tribunal
- The Tribunal's decision will be made public (on its website)
Although this is a welcome development to mitigate damage caused by inconsistent Notices, one cannot help but think that if all Notices were dealt with at the same speed, all potential for prejudice would be eliminated.
See also our article in relation to Metro Bank where a similar issue arises.