JPMorgan Chase & Co. didn’t pull any punches this week when it abruptly moved to distance itself from Jes Staley. Accusing him of repeated “acts of disloyalty” and “intentional and outrageous conduct” over his ties with deceased pedophile financier Jeffrey Epstein, the bank’s lawsuit seeks to clawback $80 million of past pay.
(Bloomberg) — JPMorgan Chase & Co. didn’t pull any punches this week when it abruptly moved to distance itself from Jes Staley. Accusing him of repeated “acts of disloyalty” and “intentional and outrageous conduct” over his ties with deceased pedophile financier Jeffrey Epstein, the bank’s lawsuit seeks to clawback $80 million of past pay.
Across the Atlantic, another former employer is proving more reserved. Barclays Plc, which stood by Staley as its regulators probed whether he had mischaracterized his relationship with the sex offender, hasn’t updated its public position on its former chief executive officer since he stepped down in November 2021, when it noted his “real commitment and skill” at running the bank.
The British bank’s latest annual report notes how Staley received about £2.3 million ($2.7 million) during 2022 as his 12-month notice period ran its course. The 70% of his deferred pay that hadn’t vested at the time of his departure — some £5 million — has been suspended, and the lender has said this will remain the case until there are further developments in the UK regulatory proceedings.
The contrasting postures of the firms, emphasize the difficult position Barclays also finds itself in even though Staley’s alleged misdeeds took place during his tenure at JPMorgan and it is the US bank facing suits from Epstein accusers and the US Virgin Island.
With Staley contesting the findings of the UK regulatory probe, the British lender is maintaining a steady silence even as questions mount about its decision making over his departure.
“If I was a Barclays shareholder I’d be worried about the collateral damage if things worsen,” said John Mann, a lawmaker who was previously a member of the UK’s Treasury Select Committee. “There’s a real possibility of reputational damage.”
A spokesperson for Barclays declined to comment.
UK regulators began an investigation into Staley’s ties to Epstein in late 2019, focused on whether the American banker had been transparent in his characterization of the relationship. After the bank revealed the existence of the probe in February 2020, Staley went on Bloomberg Television to defend himself saying that the Barclays board had conducted its own review and had concluded “that I had been transparent and open with the bank.”
A year and a half later, Staley stepped down as CEO after the UK authorities shared the preliminary results of its probe that deemed Staley had underplayed his relationship with Epstein, findings that the American executive is challenging.
The Barclays board said in its filing at the time that it was “disappointed at the outcome” and noted the “investigation makes no findings that Mr Staley saw, or was aware of, any of Mr Epstein’s alleged crimes, which was the central question underpinning Barclays’ support for Mr Staley following the arrest of Mr Epstein in the summer of 2019.”
Good Leaver
Staley exited as a so-called good leaver, meaning Barclays paid him all the money he was contractually entitled to. That included benefits like covering his relocation costs to move back to the US, which came to £107,000 last year.
His unvested stock — worth about £5 million based on a Bloomberg analysis of regulatory filings — remains suspended, according to the firm’s 2022 annual report. A decision on that is pending “further developments in respect of the regulatory and legal proceedings related to the ongoing FCA and PRA investigation regarding Mr Staley.”
But the FCA’s case against Staley may potentially not reach an outcome until other lawsuits are completed, a person familiar with the matter said. That raises the prospect of little closure for Barclays on the matter for months, if not years.
A spokesperson for the FCA declined to comment. A lawyer for Staley didn’t respond to requests for comment.
Board Review
Meanwhile, the board’s review of Staley’s ties to Epstein is under scrutiny.
At the end of 2019, Barclays Chairman Nigel Higgins was provided access to more than 1,000 emails between Staley and Epstein, whose contents are behind many of the allegations in the US lawsuits against JPMorgan. But a board review didn’t see them as proving a closer friendship.
Even before the most lurid accusations from the US lawsuits emerged, Barclays investors have expressed their unease at how the lender has handled the matter. Shortly after Staley’s exit, several of the lender’s top shareholders raised concerns about the terms of Jes Staley’s departure.
What Bloomberg Intelligence Says
JPMorgan’s third-party claims against Staley raise the likelihood of settlement if the lawsuits survive motions to dismiss, which we think is probable. If the bank can’t win early dismissal, it faces the prospect of undesirable revelations in discovery and prolonged headline risk, likely pushing the bank to settle. We could envision a settlement where both the bank and Staley contribute.
— BI analyst Elliott Stein
Barclays silence was an increasingly rare stance even before JPMorgan’s about-turn. Last month, one of Staley’s staunchest backers disowned him as the accusations from the lawsuits emerged.
The president of his alma mater, Bowdoin College, apologized for saying in 2019 that Staley represented “all that is great about Bowdoin and the culture and values here.”
Given “what we now understand about the depth of his relationship with Epstein, I was clearly wrong,” said Bowdoin President Clayton Rose.
Read More: Staley’s Ties to Epstein Spark Mea Culpa From Bowdoin President
Even more awkwardly for the Barclays board, the firm’s then-largest shareholder Edward Bramson offered some prescient advice in an August 2020 letter to investors.
Pointing to a USVI subpoena that required JPMorgan to hand over Staley’s communications with Epstein, the activist shareholder — a longtime critic of Staley — warned the request could further damage Barclays’s reputation.
“The kindest thing the board could do for him would be to let him go,” Bramson wrote in the letter. “The board could then focus strictly on damage control and on the future course of the company.”
–With assistance from Katherine Griffiths, Hannah Levitt, Ava Benny-Morrison and Jonathan Browning.
(Adds potential timeframe of FCA process in 13th paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.