A former activist shareholder in Barclays Plc has reemerged to raise fresh concerns about the way the bank’s directors handled ex-boss Jes Staley’s links to convicted sex offender Jeffrey Epstein.
(Bloomberg) — A former activist shareholder in Barclays Plc has reemerged to raise fresh concerns about the way the bank’s directors handled ex-boss Jes Staley’s links to convicted sex offender Jeffrey Epstein.
Sherborne Investors said individual directors should be assessed over their support of Staley when regulators were investigating him, according to a letter sent to its investors Friday and obtained by Bloomberg News. It also called on UK regulators to consider whether anyone wanted to remove Staley but did not dissent from board decisions.
Edward Bramson, Sherborne’s partner and founder, held a large position in Barclays for years before cutting his losses in 2021. His fund took a stake in the bank in 2018 and repeatedly pushed for changes including cuts to its investment bank and the removal of Staley. In 2020, he raised further concerns about probes into the CEO’s ties to Epstein, while the bank board continued to support its leader.
The communication also criticizes Barclays chairman Nigel Higgins’s handling of the controversy surrounding Staley, who was CEO of Barclays from 2015 to 2021, and JPMorgan Chase & Co., where Staley previously worked and had Epstein as one of his most valuable clients in the private bank.
Friday’s communication, which comes nearly two years after Sherborne gave up on its campaign and sold its shares, is another sign that the headaches around Barclays’s former CEO aren’t going away. Last week, proxy firm Institutional Shareholder Services said investors should ask the board questions about the issue at the AGM on May 3.
In its latest letter, Sherborne argues that the bank continues to suffer from a weak valuation because investors are worried about “the board’s demonstrably poor judgment and fear of what new, unpleasant surprises will result from it.”
Barclays, JPMorgan and the FCA declined to comment. A lawyer for Staley declined to comment.
Barclays disclosed in February 2020 that the Financial Conduct Authority had opened a probe over Staley’s previous links to Epstein. Barclays said that following a review, its board thought he had been “sufficiently transparent” about the relationship. But in November 2021, Staley quit with immediate effect after the bank received the FCA’s preliminary findings.
Bramson suggested directors’ decisions on this matter should be reviewed and — if warranted by the findings — the UK should “use regulatory authority to declare individuals no longer fit and proper to serve as directors of regulated firms.”
Epstein died in prison in 2019 after he was arrested on charges of sex-trafficking minors. He had previously pleaded guilty in 2008 to child prostitution charges. Staley has been cited in lawsuits against JPMorgan relating to Epstein, but has not been named as a defendant. JPMorgan sued Staley in March, saying he should be responsible for any liability facing the bank from the lawsuits.
Sherborne singled out Higgins, who became chairman in 2019 after a career at investment bank Rothschild & Co., for having little experience in managing capital risk. It was also critical of JPMorgan for “deflecting blame onto its former employee.”
Bramson, who said in 2020 that Barclays should push out Staley before ties to the Epstein cases damaged the bank’s reputation, said he didn’t want to rehash his battles with the firm, but told his investors that “one is struck by how prescient” his comments at the time were.
–With assistance from Leonard Kehnscherper.
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