The Financial Conduct Authority (FCA) fined Achilles Macris $1.1 million for failing to be open and co-operative with the FCA.

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.

Macris was represented by Carlos Conceicao of Clifford Chance in London.

Macris was the main contact with the FCA’s predecessor the Financial Services Authority (FSA) in relation to CIO International and as an approved person he was required to deal with the Authority in an open and cooperative way.

The FCA alleged that 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.

“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,” said FCA enforcement chief Mark Steward. “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 March 23, 2012, the front office was instructed that no further trades should be executed on the portfolio until discussions had taken place.

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.

On March 28, 2012, Macris attended a supervision meeting with the Authority at which CIO International and the Synthetic Credit Portfolio were discussed.

The Authority was updated on both positive and negative developments relating to the Synthetic Credit Portfolio, including that it had made a loss of $200m, and that it had experienced rebalancing problems, but was told that it was now balanced and did not require additional trading.

Macris did not provide the Authority information about the full extent of the difficulties that the Synthetic Credit Portfolio was then facing or take steps to ensure that the Authority understood there were causes for concern with the portfolio.

On April 10, 2012, Macris took part in a telephone call with the Authority which was set up to try to correct any inaccurate impression that may have been given by the publication of articles about the ‘London Whale’.

By the time of the call Macris was aware that the position of the Synthetic Credit Portfolio had worsened and its losses had increased.

The FCA said that the call provided Macris an opportunity to provide information about concerns with the portfolio and the heightened response being adopted to address them.

Macris did not do so. Instead, Mr Macris allowed an inaccurate impression to be given that there had been no material changes since the supervision meeting and that there were not wider causes for concern with the Synthetic Credit Portfolio.

The FCA said that Macris should have appreciated that, by failing to inform the Authority during the meeting and the call of the causes for concern and by allowing the Authority to be reassured concerning the position of the Synthetic Credit Portfolio, the message delivered was not an accurate reflection of the state of the Synthetic Credit Portfolio.

At the very least a high level indication that there were causes for concern during the meeting, the call or at any time before the April 29, 2012 would have provided the Authority with the opportunity to follow up with questions about the nature of the concerns and form its own assessment of the position.

Marcis responded to the FCA action with the following statement:

“Today’s outcome represents a major climb-down by the FCA, after four years that I have spent fighting to clear my name. The Final Notice issued to JP Morgan by the FCA in 2013 wrongly and unfairly accused me of deliberately misleading the FSA. That Notice was released to the public without the FCA ever having properly heard my side of the story. Today the FCA has finally accepted that this allegation against me was utterly wrong.”

“Today’s result also vindicates my actions in bringing my third party reference seeking to have this allegation removed from the JP Morgan Notice. The FCA demonstrated a total disregard for my rights as an individual in its haste to issue the JP Morgan Notice and impose a large fine on the firm.”

“Having already achieved two significant court victories, in which the FCA was found to have acted against the law in not giving me third party rights, I look forward to further vindication in the Supreme Court, where if I succeed, the FCA will have to expunge from the JP Morgan Notice the false and unfair statements made about me.”

“The FCA has had several opportunities to admit its mistakes, but instead, at every turn, it has until now sought to defend and justify its position, wasting public funds.”

“The fact is that after three and a half years of investigation, the FCA has finally concluded that in 2012, without any intention to mislead, I did not during the course of a single meeting and a single phone call disclose or ensure that others in my team disclosed certain information to the FSA which it considers that it should have been made aware of.”

“The FCA ignores the fact that I initiated the phone call in question to provide the FSA with access to the right JP Morgan staff to answer any of their questions. It also ignores my 30-year financial services industry track record of open and cooperative relationships with regulators.”

“While I maintain that my efforts in this regard were above and beyond any reasonable standard of transparency with regulators, now that the FCA has accepted that I did not deliberately mislead it, I have decided not to prolong what has been a drawn out and burdensome process and have settled with the FCA, on the basis that there is no prohibition on my working in the regulated sector.”

“I remain profoundly concerned about how the FCA, and in particular its Enforcement staff, has acted. It made completely unfounded public allegations and assertions, without giving me a fair hearing, which it has now had to withdraw, but which have significantly damaged my reputation and career.”

“The simple truth is that this has been a costly and ultimately failed investigation which has gone on for far too many years.”