The Upper Tribunal determined that Mr Ashton, the former Global head of G10 Voice Spot FX at Barclays, was not identified in two Decision Notices issued to his employer Bank (Barclays) and another Bank (UBS) and therefore that the third party rights provisions in s393 FSMA 2000 did not apply to him.
Bacground
On 12 November 2014, the FCA published a Final Notice imposing a penalty on UBS for misconduct arising from inadequate controls over its G10 spot FX trading business (the UBS Notice).
The UBS Notice included reference to a particular occasion on which UBS attempted to manipulate the Euro/US Dollar fix rate by coordinating a series of actions with three other firms (“Firms A, B and C”) via a chat room. Participants in this chat room used a series of phrases to describe steps in the rate manipulation process including “clearing the decks” and “leaving with you the ammo”.
On 20 May 2015, the FCA published a Final Notice imposing a penalty on Barclays for misconduct arising from inadequate controls over its FX business (the Barclays Notice).
The Barclays Notice included examples of Barclays sharing information on its net currency pair orders, and information about “the size, direction and level of client stop orders” with other firms via a chat room.
Mr Ashton’s case was that market participants who read the UBS Final Notice would conclude that Firm A was in fact Barclays and that statements attributed to Firm A were made by him and that those who read the Barclays Final Notice would reasonably conclude that references to Barclays were in fact references to him.
Findings
The Upper Tribunal applied the legal test under s393 FSMA, as articulated in the recent case of FCA v Macris [2015] EWCA 490, which held that the correct test for identification is objective and should include consideration of what hypothetical individuals acquainted with the third party or operating in his area of the financial services industry might reasonably have known at the time of the publication. The test focuses on the knowledge that could reasonably be expected to have been obtained by well-informed market participants, such as Mr Ashton’s counterparties in other leading banks (referred to as relevant readers), without conducting an extensive forensic exercise to remind themselves of what they had read previously.
The Upper Tribunal found that there was insufficient evidence that Mr Ashton had been identified by the UBS Notice. Despite press coverage documenting Mr Ashton’s participation in an exclusive, four-member chat room called “The Cartel”, the UBS Notice did not enable relevant readers to conclude that the chat room in question was “The Cartel”, as press reports had indicated that there were many such chat rooms, nor that the events in question had taken place during the seven months that Mr Ashton was said to be a member of that group.
The Upper Tribunal also found that there was insufficient evidence that Mr Ashton had been identified by the Barclays Notice for the same reasons. Although articles were published in the intervening period which referred to Mr Ashton being “caught up in the scandal”, these did not enable a relevant reader to conclude that quotations in the Barclays Notice were those of Mr Ashton.
The Upper Tribunal noted that a Consent Order regarding similar issues, published by the New York State Department of Financial Services on the same day as the Barclays Notice, did identify Mr Ashton by reference to his job title. However, this information was omitted from the Barclays Notice and so was not a relevant consideration in this case.
View Mr Ashton – Third Party Rights, 25 January 2016