20 Dec 2018
Barclays Bank and its New York branch have been hit with a $15 million penalty in the US over its CEO’s attempt to unmask the author of two whistleblowing letters.
On Tuesday the New York Department of Financial Services (DFS) said the incident, in which CEO Jes Staley tried to identify the whistleblower, revealed shortcomings in corporate culture that could have potentially damaged the bank’s whistleblowing program.
The regulator also found that several senior managers failed to follow whistleblowing procedures and ‘it appears that the cultural transformation that Barclay’s Group Compliance had been working hard to instill in the more than one hundred thousand Barclays employees worldwide, was not nearly complete.’
The US penalty comes several months after British regulator the Financial Conduct Authority (FCA) fined Staley £642,430 over the incident, saying he failed to act with ‘due skill, care and diligence.”
It is understood that one of the letters claimed to be from a Barclays shareholder and contained various allegations, some of which concerned Staley.
The letter reportedly raised concerns about his hiring of a senior official, who was his former colleague at JP Morgan.
DFS Superintendent Maria Vullo said: “Whistleblowers are vital to uncovering and addressing intentional wrongdoing. DFS’s thorough investigation uncovered actions at the top that exposed the bank to risk and created an atmosphere in which employees might doubt that it was safe to escalate issues of concern to the bank.”
The DFS added that the conduct uncovered was ‘a step backwards for Barclays,’ which had been implementing key changes following several enforcement actions by government agencies, including a Cease and Desist Order brought jointly in August 2010 by DFS’s predecessor, the former Banking Department.
In a statement, Barclays said that is has ‘agreed to undertake additional reporting and remediation undertakings in respect of its whistleblowing programme’ and that all regulatory investigations relating to these events are now concluded.’
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