The Financial Conduct Authority v Grout

For a person to be identified in a regulatory notice, the notice must identify that person by name or by a synonym, such as an office or job title. A synonym must be capable of applying to only one person, who must be identifiable from the notice or from publicly available information used to interpret its language. Additional facts cannot be assembled to show that the notice refers to the person. A collective description such as “the traders on the SCP”, or an anonymous reference to “one trader”, does not identify an individual where several people fall within the description. The appeal was allowed and the respondent’s reference to the Upper Tribunal was dismissed.

The Financial Conduct Authority issued a notice concerning misconduct in JP Morgan’s synthetic credit portfolio. The notice criticised SCP management and referred to conduct by “traders on the SCP” and “one trader”, without naming Julien Grout. The Upper Tribunal applied the identification test stated by the Court of Appeal in Macris and held that Mr Grout was identified and prejudiced by the notice.

After the Supreme Court overturned that approach in Macris, the FCA appealed. The central issue was whether the notice itself, read with information properly available to the public, identified Mr Grout for the purposes of section 393 of the Financial Services and Markets Act 2000.

1. The FCA’s appeal was allowed. Mr Grout’s application to adduce further evidence was dismissed because the evidence could not affect the outcome. His reference to the Upper Tribunal was dismissed, and costs were ordered against him.

2. The governing test was the ratio of Macris in the Supreme Court. A person is identified under section 393 if named or described by a synonym, such as an office or job title. Where a synonym is used, the notice must show that it could apply to only one person, and that person must be identifiable from information in the notice or publicly available information which merely interprets, rather than supplements, the notice.

3. The descriptions “traders on the SCP” and “the traders on the SCP” were collective descriptions. They did not identify one person. The references to “one trader” were deliberately vague and anonymous, not synonymous with Mr Grout. Read in the context of the whole notice, those references appeared in criticism of CIO Management rather than as a specific identification of the trader.

4. References to the traders’ decisions or mental states did not alter that conclusion. Since Mr Grout was not the sole holder of the position described, the question whether publicly available sources would readily reveal his name did not arise. The court also rejected any distinct Article 8 argument: section 393 supplied Parliament’s proportionate response to possible reputational damage.

5. The Upper Tribunal had correctly followed the then binding Court of Appeal decision in Macris. Its decision was nevertheless untenable after the Supreme Court had overturned that test.

1. Court of Appeal (Civil Division) — [2018] EWCA Civ 71: allowed the FCA’s appeal, dismissed Mr Grout’s application to admit further evidence and dismissed his reference to the Upper Tribunal.

2. Upper Tribunal (Tax and Chancery Chamber) — [2016] UKUT 302 (TCC): applying the then Court of Appeal test in Macris, held that Mr Grout was identified in the notice and entitled to make submissions.