[JURIST] The UK Supreme Court [official website] ruled [judgment, PDF] on Wednesday that the Financial Conduct Authority (FCA) [official website] did not misidentify former JPMorgan official Achilles Macris in its penalty notice in connection with the “London Whale” Scandal. The FCA agreed that a conclusion that Macris was prejudiced would be justified if Macris was in fact identified in the warning and the penalty notices were served on JPMorgan. However, the FCA rejected the claim that Macris was identified. Lord Sumption, writing for the majority, while acknowledging that the meaning of the word “identifies” is not elaborated, stated: “it is clear from the language that it is the reasons contained in the notice which must identify the third party and not some extrinsic source.” Sumption added:

Once the facts relating to one person or firm under investigation are ascertained or admitted and are found to justify criticism or sanctions, there will often be no proper reasons for withholding that information from the market. Yet there will almost always be people in the know, who will realise when they read the notices which individuals are encompassed by apparently anodyne collective expressions such as “management” or who is likely to have been responsible for particular failings of the firm. … Even for those who are further from the scene, the internet is a fertile source of information and gossip for those who are willing to go to some trouble to discover his identity.

Macris expressed his disappointment [Reuters report] with the decision and stated that the FCA won the case on a mere technicality. Legal commentators pointed out that the decision “will do little to check the perceived tendency on the part of the regulator and firms to reach swift settlements … at the expense of procedural rights for individuals caught up in regulatory investigations.”

The “London Whale” scandal [Bloomberg Backgrounder] began in 2012 when a trader, Bruno Iksil, known as the London Whale, caused losses amounting to USD $6.2 billion while at JPMorgan Chase & Co. Macris is just the latest in a long line of litigation on this case. Multiple traders for JPMorgan have been indicted and convicted for hiding trading losses and fraud [Financial Post reports]. Iksil’s case was dismissed by JPMorgan but Ikshil has faced no enforcement action [Business Insider UK report].