FIN.

Tribunal partially overturns FCA on lack of integrity consequences

The Tribunal has delivered its decision on FCA’s proposal to impose a public censure and ban from carrying on any significant influence functions on Andrew Tinney for his actions as COO of Barclays Wealth and Investment Management. Mr Tinney had been a CF29.  FCA said Mr Tinney had either deliberately or recklessly made false or misleading statements and omitted material information about a document about the culture of Barclays Wealth America (BWA).

There were 2 separate instances:

  • the drafting of a note for the CEO of Wealth to be sent on to the bank’s senior management, in response to an allegation that a cultural audit report about BWA had been suppressed; and
  • a response to the New York Fed when it requested a copy of the cultural audit in its capacity as a regulator of the US business.

The key to FCA’s argument was that Mr Tinney closed his mind to the fact that either the anonymous report or the New York Fed requests referred to, or would be relevant to, the BWA report.

The Tribunal faced problems with witnesses – many of whom refused to attend for examination, including those whose evidence had been covertly recorded for the purposes of investigating the anonymous report.

The problem started when SEC presented the BWA US business with a “deficiency letter” in January 2012 following a review. Mr Tinney was asked by Mr B (the CEO of Wealth) to oversee the remediation process. Mr Tinney decided to institute a culture audit and Mr B approved the appointment of consultants. Mr Tinney mentioned to SEC the existence of the workstream, and SEC told him that a whistleblowing email had been received, which seemed similar to a previous email of which Mr Tinney was aware.  Mr Tinney told SEC about this, and said the first email was one, but not the only, reason for instituting the culture review.  Mr B also told SEC about the culture review.

The external consultants interviewed senior managers, and Mr Tinney had expected a report only orally. However, as he was away, another member of staff had told the consultant to send a report to his home address. Only Mr Tinney received the document. The document included some damning conclusions that seemed to negate Wealth’s attestations that they did not know how bad the culture they were acquiring was, and that the team had pursued a culture of “revenue at all costs”, removing any intervention from those who did not like the high risk, compliance-hostile culture.  It said the wider positive Barclays culture had not been allowed to influence the “siloed” BWA business. The report included detailed examples of failings and suggested various potential courses of action.

Mr Tinney and Mr B decided not to put the partly “toxic” document on Barclays’ systems or circulate it within the bank. Following a progress request from the New York Fed, Mr B and Mr Tinney agreed they would wait for more information before producing what they regarded as the relevant report, and told the New York Fed this. Mr B subsequently decided the draft report should be used as the basis of a culture audit workstream rather than finalised. At this stage, Mr Tinney was informed by Mr B that both the head of the US business and Bob Diamond had been briefed, and was told they had.

Subsequently there were many meetings and emails, at which confusing and contradictory references were made – but the head of Strategy at Wealth was told there was no report. Mr B then met the New York Fed, and as a result asked Mr Tinney to provide high level feedback to it.

Eventually, and as a result of the Barclays benchmark fines, a new review was undertaken and, in the context of this, an anonymous email was received including an allegation that a report on culture had been received and was being withheld to shield members of a “clique”. Mr Tinney said he didn’t think this referred to the report, but something more recent, but the email was referred for investigation. Mr B decided to draft a note about the allegations. Disputes about the content of the note could not be fully determined by the Tribunal because of witnesses not being available. What is clear is that in the final version of the note the implication was that the consultants had not produced anything in writing.  FCA alleged Mr Tinney acted without integrity in breach of APER 1 because he knew the recipients of the note would use it to inform their response to the email and intended the note to give the impression there was nothing in writing, deliberately avoided mentioning the document although it was obvious they should be informed of its existence and closed his mind to the likelihood the email was referring to it.

The Tribunal concluded Mr Tinney did act without integrity in not informing management of the existence of the document, but not that he had deliberately or recklessly given the impression it did not exist. But, on reading drafts of the note, he should have appreciated the document was relevant and should have mentioned it. Later, he refused to provide the “report” to his inhouse legal team.

Next, the Compliance Officer from BWA requested a copy of the report, and Mr Tinney referred her to the workshop outputs. When this was queried, he said the only substantive document as from the workshop.  FCA said this was untrue.  The Tribunal disagreed.  Eventually, when the New York Fed pressed, Mr Tinney revealed the existence of the document to the Compliance Officer and claimed she did not think that was what was required.  Again, FCA and the Tribunal differed on their conclusions as to Mr Tinney’s behaviour.

Finally, Barclays decided to dismiss Mr Tinney.

The Tribunal concluded that

  • Mr Tinney had acted without integrity in his actions in response to the New York Fed but had not misled the FCA; and
  • the appropriate sanction was a public censure, but not a partial ban.

As a result, FCA has now published the final notice, confirming the censure but not the ban.

 

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Emma Radmore