Macris revisited: synonyms in the spotlight

Financial Conduct Authority v Macris [22.03.17]

In June 2015, we reported on the Court of Appeal’s findings that the Financial Conduct Authority (FCA) had breached an individual’s third party rights in the issuance of a decision notice identifying him by the use of a synonym.

The decision has recently been reversed by the Supreme Court (Financial Conduct Authority v Macris [22.03.17]) with new guidance provided as to the appropriate legal test to determine whether a warning notice or decision notice issued by the FCA ‘identifies’ an individual.

If a notice unfavourably identifies an individual who is not the subject of the notice (as per s.393 of the Financial Services and Markets Act 2000) then a copy of the notice should be given to the individual in advance of it being made public. Such ‘third party rights’ enable an individual to make representations on any criticisms of them contained therein, and to request disclosure of any documents upon which those criticisms are based. These rights are important since adverse commentary from the FCA can cause serious reputational damage.


In September 2013, the FCA issued notices to JP Morgan Chase Bank N.A. (the Bank) concerning its supervision failures regarding trading losses of circa £6.2 billion. The notices referenced the Bank “on one occasion (by virtue of the conduct of CIO London Management) having deliberately misled the FCA”.

Mr Macris acted as the Bank’s International Chief Investment Officer at the relevant time. He managed Bruno Iksil, the trader responsible for the losses, who has been dubbed the “London Whale” because of the magnitude of his derivatives positions.

Both the Upper Tribunal and the Court of Appeal considered the reference to “CIO London Management” in the Bank’s notice as a reference to Mr Macris, and that Mr Macris should have been afforded third party rights over the notices.

The failure to grant Mr Macris third party rights was significant and prejudicial to Mr Macris, since the allegation of deliberately misleading the FCA was not replicated in notices served on him as an individual. The FCA appealed that finding to the Supreme Court.

The Supreme Court decision

The Court of Appeal had drawn on the law of defamation to require a “key or pointer” which would objectively lead persons acquainted with the individual — or persons operating in the financial services industry — to identify the individual based on what might reasonably have been known at the date of publication. They accordingly upheld the finding of the Upper Tribunal.

The Supreme Court (Lord Wilson dissenting) disagreed with this approach, adopting a more restrictive interpretation of s.393. They clarified that use of a synonym can only identify an individual where it is clear from the notice itself that they are the sole person who could be being referenced.

Publicly available information may be used to identify the individual if it is generally known or easily discoverable — but only in circumstances where that information is used to interpret the language of the notice.

Lord Sumption proposed that if simple and straightforward enquiries allowed the public to identify a single individual from a synonym, the test would be satisfied. Information known to only a small number of individuals or within an industry, would not. Lord Neuberger and Lord Hodge agreed.

Lord Mance proposed a broader test, more aligned with that of the Court of Appeal such that if “persons operating in that world, unacquainted with the particular individual or his company, though familiar with information generally available publicly to operators in that world”, would identify the individual then that would be sufficient.

He agreed, however, that Mr Macris had not been identified in the Bank’s notice.

Potential for conflict and inconsistency

Regulated entities often settle with the FCA at an early stage in order to access settlement discounts, and accordingly firm’s notices are often published long before the FCA’s investigations into employees have concluded. Employees have different motivations, since they often face serious personal sanctions.

In a speech on 31 March 2017, Mark Stewart — Director of Enforcement for the FCA — referenced the Macris case as evidencing the difficulties the FCA face in managing the employer/employee conflicts in regulatory investigations.

He further acknowledged, “from a broad regulatory and law enforcement perspective, inconsistent verdicts and findings based on the same facts do not provide the best authority or precedent or clear bright lines for the rest of the market”.


There is a regulatory balancing act at play because the FCA has a conflicting interest in maximising the “credible deterrence”  of a notice — through the inclusion of specific details and findings against individuals — whilst seeking to minimise the engagement of third party rights. Third party rights add complexity to the drafting of notices and accordingly may significantly delay publication.

Following the Court of Appeal decision in 2015, insurers may have seen an uptake in FCA-regulated insureds seeking to deploy arguments as to the breach of third party rights. The FCA stayed such cases pending determination of the Macris case.

Insurers may see an initial flurry of stayed cases grappling with the new test applied by the Supreme Court. Thereafter we expect to see this argument raised less commonly in the future.

Whilst the Supreme Court appeared troubled by prejudice suffered by Mr Macris, it will be a rare case where individuals are considered to have been identified by a synonym.

Related item: Third Party Rights: FCA’s Achilles heel?

Read other items in Professions and Financial Lines Brief - May 2017