Financial Conduct Authority v Macris

Key legal principle: The Supreme Court held that for the purposes of section 393 of the Financial Services and Markets Act 2000 a person is "identified" in a warning or decision notice only if he is named or described by a synonym (for example an office or job title) such that, from the terms of the notice itself or by reference to information which is generally and publicly available for the purpose of interpreting the notice, the description applies to one identifiable individual.

The court ruled that it is impermissible to treat a third party as identified by combining the notice with extrinsic factual material which supplements the notice (for example, specialised insider knowledge or investigative material) so as to produce a "jigsaw" identification. The relevant audience is the public at large (or persons operating in the relevant financial world using generally publicly available information), not a small group of people with special knowledge of the individual.

The Court rejected reliance on the law of defamation for construing section 393 and emphasised practical considerations for the regulator's investigatory and disciplinary functions.

Background and facts:

Mr Achilles Macris complained that the Financial Conduct Authority published a decision and final notice served on JP Morgan Chase Bank NA that contained reasons which identified him as responsible for failings in the Bank's Chief Investment Office (the "London Whale" losses), without giving him prior copies or an opportunity to make representations under section 393 of the Financial Services and Markets Act 2000. The Bank settled with the Authority and the notices were published on 19 September 2013. Mr Macris was not named in those notices but they referred repeatedly to conduct by "CIO London management".

Procedural posture:

• Upper Tribunal (Judge Herrington): held that Mr Macris was a third party under section 393 and entitled to receive the notice.
• Court of Appeal [2015] EWCA Civ 490: agreed with the result that Mr Macris was identifiable on an objective test (drawing an analogy to defamation principles and reference to persons acquainted with the individual or operating in the relevant financial market).
• Supreme Court ([2017] UKSC 19): allowed the Authority's appeal.

Nature of the claim and relief sought: Mr Macris sought a declaration that he had been identified in notices served on the Bank and therefore ought to have been served with a copy under section 393 and given an opportunity to make representations.

Issues framed by the Court:

1. What does the word "identifies" in section 393 mean?
2. What extrinsic background facts, if any, may be relied on to determine whether a person is "identified" by a notice?
3. Whether the notices served on JP Morgan identified Mr Macris for the purposes of section 393.

Court’s reasoning and disposition:

The majority (Lord Sumption, with whom Lord Neuberger and Lord Hodge agreed, and with Lord Mance reaching the same outcome on a closely reasoned basis) concluded that identification requires naming or a synonym that, on the face of the notice or by reference to information which is generally and publicly available for the purpose of interpreting the notice, refers unambiguously to a single individual. Reliance on specialised knowledge of a limited group or on extrinsic facts that merely supplement the notice to produce a "jigsaw" identification is not permissible. The court emphasised the need to balance third party fairness with the practicalities of the regulator’s functions and rejected the Court of Appeal’s defamation analogy.

Applying that approach, the majority held that the references to "CIO London management" in the published notices did not identify Mr Macris within the meaning of section 393. Consequently, the appeal was allowed.

Appeal allowed. The Supreme Court held that section 393 is not engaged unless a notice itself names a person or uses a synonym that, on its face or by reference to information which is generally and publicly available for interpreting the notice, uniquely identifies one individual. Extrinsic information which supplements the notice to produce a "jigsaw" identification (for example specialist insider knowledge or unrelated investigative material) is not permissible. Applying that test the notices to JP Morgan did not identify Mr Macris and therefore he was not a third party entitled to a copy under section 393.

On appeal from the Court of Appeal [2015] EWCA Civ 490, which had upheld the Upper Tribunal (Judge Herrington) decision that Mr Macris was identifiable. The Upper Tribunal had directed that the entitlement to third party status under section 393 be determined as a preliminary issue; Judge Herrington found for Mr Macris. The Court of Appeal affirmed that result. The Supreme Court allowed the Financial Conduct Authority's appeal and reversed the lower courts on the identification point.