FCA fines former Head of JP Morgan’s CIO International for failing to be open and co-operative
The Financial Conduct Authority (FCA) has today fined Achilles Macris £792,900 for failing to be open and co-operative with the Authority. Mr Macris was Head of CIO International for JPMorgan Chase Bank, N.A. in London. In the role he was responsible for a number of portfolios, including the Synthetic Credit Portfolio, at the time of what became known as the ‘London Whale’ trades.
Mr Macris was the main contact with the FCA’s predecessor the Financial Services Authority (FSA) (FSA and FCA together the Authority) in relation to CIO International and as an approved person he was required to deal with the Authority in an open and cooperative way. Between 28 March 2012 and 29 April 2012 Mr Macris did not inform the Authority about concerns with the Synthetic Credit Portfolio and as a result he failed to meet the standards expected of an approved person under Statement of Principle 4.
Mark Steward, director of enforcement and market oversight said:
‘A failure to communicate openly with us can affect the well-running of markets and cause unnecessary harm to investors, especially in times of financial stress or crisis. Regulators need open communication with firms so that better decisions can be made sooner. Mr Macris should have explained the position more squarely especially when he knew the Synthetic Credit Portfolio’s losses had worsened.'
The Synthetic Credit Portfolio began to suffer significant losses from the beginning of 2012. On 23 March 2012 the front office was instructed that no further trades should be executed on the portfolio until discussions had taken place. Mr Macris subsequently asked that daily risk reports for the Synthetic Credit Portfolio be produced and in the following days took other measures, such as requesting assistance from outside CIO and arranging daily progress meetings with CIO Risk and the front office. Despite these measures the Synthetic Credit Portfolio continued to suffer losses.
Although settlement in this case was reached during Stage 2 which would usually lead to a 20% discount, in exceptional cases the Authority may accept that there has been a substantial change in the nature or seriousness of the action being taken and that an agreement would have been possible at an earlier stage if the action had commenced on a different footing. The Authority and Mr Macris therefore agreed that an additional 10% discount is appropriate. Were it not for the total discount of 30%, the financial penalty would have been £1,132,747.