The Financial Conduct Authority v Macris

For third-party rights under the Financial Services and Markets Act 2000, section 393, the relevant matter must itself contain a reference, or key or pointer, to a person other than the notice recipient. A person need not be named. Identification is assessed objectively by asking whether persons acquainted with that person, or operating in the relevant financial-services market, would reasonably have recognised him at the notice date. Relevant contemporaneous external knowledge may be considered, but unlimited ex post facto material is impermissible. Corporate criticism alone does not identify an individual. On the facts, CIO London management identified an individual and, with relevant market knowledge, identified Mr Macris. The appeal was dismissed.

The Financial Conduct Authority issued warning, decision and final notices to JPMorgan Chase Bank, N.A., imposing a financial penalty for losses connected with its Synthetic Credit Portfolio. The notices referred to CIO London management but did not name Mr Macris, the International Chief Investment Officer.

The Upper Tribunal held that the notices identified Mr Macris for the purposes of section 393 of the Financial Services and Markets Act 2000 and that he was entitled to third-party rights. The Authority appealed on the correct legal test and, with permission, on its application to the facts. The central issue was whether the notices contained matters identifying Mr Macris.

The appeal was dismissed unanimously. Lady Justice Gloster gave the leading judgment, with Lord Justices Patten and Longmore agreeing.

1. Statutory framework. Sections 393(1) and 393(4) of the Financial Services and Markets Act 2000 require third-party rights where reasons in a warning or decision notice relate to a prejudicial matter identifying a person other than the notice recipient. The relevant matter must be referred to in the notice.
2. Identification test. The question is logically approached in two stages. First, construing the notice alone, the relevant matter must contain a specific reference, or key or pointer, to a person. Criticism of a corporate recipient from which responsibility might be inferred for its chairman or employee is insufficient. Secondly, once such a reference exists, the court asks objectively whether persons acquainted with the person, or operating in the relevant financial-services sector, would reasonably have understood the words to refer to him at the date of promulgation.
3. External material may be considered at the second stage, but only insofar as it reflects information which the relevant acquaintances or market participants might reasonably have known at that date. Unlimited ex post facto reliance on material in the public domain is impermissible. The Authority’s submission that identification had to be found exclusively within the notice was rejected.
4. The defamation authorities, including Morgan v Odhams Press Ltd [1971] 1 W.L.R. 1239 and Knupffer v London Express Newspaper Ltd [1944] A.C. 116, provided a useful analogy, subject to the statutory requirement for a specific reference to a person. Watts and Laury were materially different corporate-level cases and provided limited assistance.
5. On the facts, the notice’s context made CIO London management a reference to a particular individual. The evidence, including publicly available material, entitled the Tribunal to find that relevant market participants could identify Mr Macris. The Upper Tribunal had articulated the test too broadly, but reached the correct conclusion. The appeal was therefore dismissed.

1. Court of Appeal (Civil Division) — The Authority’s appeal was dismissed. [2015] EWCA Civ 490.
2. Upper Tribunal (Tax and Chancery Chamber) — Judge Timothy Herrington held that the notices identified Mr Macris for the purposes of section 393 of the Financial Services and Markets Act 2000 and that he was entitled to third-party rights. The decision was promulgated on 10 April 2014.