(Bloomberg) -- Jes Staley’s legal showdown over his career-ending friendship with the late sex offender Jeffrey Epstein will bring in some of the most prominent names in the City of London.
On Monday, the former Barclays Plc chief will head to court to challenge a lifetime ban from the UK finance industry and findings that he “recklessly” misled regulators about his links to Epstein.
It will be the first time Staley testifies in public about the relationship since resigning from the British lender in 2021. Staley has maintained that he cut direct contact with the late sex offender and financier before he took the reins at Barclays in 2015 — a timeline that regulators dispute.
Among the witnesses called by the Financial Conduct Authority in the four-week trial are some of the biggest figures in London’s finance scene including Andrew Bailey, who led the FCA before he became governor of the Bank of England, and Barclays Chairman Nigel Higgins. Both were involved in a crucial meeting when regulators started asking tougher questions about how Staley characterized his relationship to Epstein.
The case, the most high-profile legal battle between the watchdog and any executive in recent years, will rake over the months in 2019 when Staley signed off on a crucial letter Barclays sent to the FCA, which was meant to satisfy the regulator’s concerns about any impropriety.
The FCA says Barclays’ letter was misleading, and recently widened its case to accuse Staley of misleading its own investigators in interviews. The regulator is relying on emails, obtained with US assistance from the Epstein estate in January last year, that described a closeness that contradicts Staley’s own statements. The emails, disclosed in a legal filing that was first obtained by Bloomberg, suggested the executive remained in contact with Epstein, via his daughter, for years after he said he severed all links.
Staley, though, says that the letter “was not intended to define the relationship between Mr. Staley and Mr. Epstein,” and was simply the bank’s response to a “very narrow and restricted” request from the regulator.
According to a copy of his opening arguments, the FCA’s case involves “a focus on the smallest discrepancies and inconsistencies in Mr. Staley’s recollection.”
Staley, 68, has long downplayed his friendship with Epstein and argues that the emails offer no proof that he kept in touch. During the preliminary hearings for the trial, his attorneys said all the emails involving his adult daughter were initiated by the late financier. The FCA’s investigation was neither fair nor impartial, they said, noting that the Barclays letter was drafted by the bank’s legal counsel and sent to Higgins for approval.
“Mr. Staley seems to be pinning quite a lot on the fact that this is a Barclays response, a Barclays letter. His main focus will be the collective responsibility for that letter,” said David Hamilton, a white collar crime lawyer at Howard Kennedy who has dealt with FCA enforcement cases for 15 years.
‘Reckless’ Test
It was shortly after Epstein’s death in jail by suicide that the FCA asked Barclays for reassurances about Staley’s relationship with him. Higgins was at that time on a walking holiday in Romania. He’s set to face questions over a full day.
As scrutiny of Epstein’s associates grew, the Barclays board gave its full support to Staley, saying in 2020 he’d been “sufficiently transparent” and that he had confirmed he “had no contact whatsoever with Mr. Epstein at any time since taking up his role.”
Staley ultimately stepped down from Barclays in late 2021, after the bank received the FCA’s preliminary findings. At the time, the lender said in a statement it was “disappointed at this outcome.” Once the regulator published its full decision, the bank’s board scrapped bonus payments for Staley that would have been worth about £17.8 million.
For the judge in the Upper Tribunal, an administrative appeals court, the case will focus on whether the FCA can prove Staley’s “reckless” conduct amounts to a breach of integrity. The Upper Tribunal effectively gets to hear the case anew, meaning that Staley will give evidence over three days at the end of the hearings, which are slated to conclude on April 3.
“There is a massive reputational issue at the heart of this. With the Upper Tribunal, it’s yet another forum in which these allegations will be aired,” added Hamilton, the lawyer. “But it is fundamentally his right to refer the matter. It’s the first time in which the case will have had any proper judicial scrutiny.”
JPMorgan Client
Also in attendance will be JPMorgan Chase & Co. Staley spent more than 30 years at the Wall Street giant, running its private bank for several years.
Epstein was a client of JPMorgan’s private bank for more than a decade despite attempts by some of the firm’s compliance staff to cut ties with the late financier over alleged links to sex trafficking and abuse of young women. Even after pleaded guilty in 2008 to Florida charges, including procurement of minors to engage in prostitution, Epstein remained a customer — helped in part by Staley’s efforts in vouching for him.
Months after Staley left the bank in January 2013, Epstein was finally dropped as a client.
It was JPMorgan’s tip-off to the FCA that first prompted the regulator’s investigation. The US bank is sending a team of lawyers to the courtroom, who may speak on matters concerning the firm. JPMorgan ended a legal claim against Staley in 2023 as part of a wider settlement that saw the bank agree to pay out $290 million to a group of almost 200 victims of Epstein’s abuse and a further $75 million to the US Virgin Islands.
The bank did not admit liability in either case.
Epstein’s relationships remain a focus outside the UK as well. US Attorney General Pam Bondi on Feb. 27 said she authorized the official release of the documents related to the deceased financier. The move followed pressure from congressional Republicans and Democrats and some of them were heavily redacted. The Justice Department said at the time that the information “largely contains documents that have been previously leaked.”
--With assistance from Harry Wilson and Katherine Griffiths.
(Updates to add Staley’s opening arguments from seventh paragraph.)
