WEBVTT - Staley Under Investigation in Whistle Blower Case (Audio)

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<v Speaker 1>When he became CEO of Barclays a year and a

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<v Speaker 1>half ago. His UH Jeff Stelly's agenda focused on restoring

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<v Speaker 1>Barclay's reputation after scandals over libor, rigging gaming currency markets,

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<v Speaker 1>and selling customers insurance products that they didn't need. But

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<v Speaker 1>now he faces a scandal of his own making, after

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<v Speaker 1>trice twice trying to unmask an anonymous whistle blower last year.

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<v Speaker 1>Steely's apologized, but Barclay's board cut is paid by an

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<v Speaker 1>amount they call significant, and the UK's Financial Conduct Authority

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<v Speaker 1>is investigating Staley's conduct. Here to talk to us about

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<v Speaker 1>what's going on with Mr Staley is Bloomberg News investigative

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<v Speaker 1>reporter Greg Farrell, who has been following this story for

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<v Speaker 1>a while. Now, Greg, let's start out with what it

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<v Speaker 1>is that Jess Stalely did here that that was problematic. Um, Well, Michael,

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<v Speaker 1>there are whistlebower protections in the us UH, certainly as

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<v Speaker 1>part of the Dodd Frank law over here, but there

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<v Speaker 1>are comparable rules in the UK that protect anyone who

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<v Speaker 1>wants to remain anonymous or not get retaliated against for

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<v Speaker 1>calling a board of director's attention to what that individual

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<v Speaker 1>perceives is wrongdoing of some kind. UM. Now, the vast

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<v Speaker 1>majority of whistleblower complaints are actually you know, crank or

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<v Speaker 1>inaccurate or self serving. But the law as codified and

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<v Speaker 1>Dodd Frank is designed to protect UH protect people, give

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<v Speaker 1>them the space to UH to send in those complaints

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<v Speaker 1>on the off chance there is a real one, they

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<v Speaker 1>won't be retaliated against. And what happened here, apparently, according

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<v Speaker 1>to the Barkley's disclosure, is that the CEO, Just Daley,

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<v Speaker 1>made an attempt and a second attempt to find out

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<v Speaker 1>who this individual was. So Staley has admitted his error.

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<v Speaker 1>I understand and apologize. Why is the UK Financial Conduct

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<v Speaker 1>Authority and other UK regulatory agencies investigating well, I think

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<v Speaker 1>the main point here and what the regulatory authorities do there,

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<v Speaker 1>And don't forget DFS. New York's Department of Financial Services

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<v Speaker 1>is also looking at it over here. UH is from

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<v Speaker 1>a compliance and regulatory point of view. UH, this has

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<v Speaker 1>nothing to do with you know, financial matters. It has

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<v Speaker 1>to do with the soundness of the bank's compliance and

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<v Speaker 1>risk practices. And this whistleblower complaint complaint UH and the

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<v Speaker 1>you know, the mismanagement of it is you know, evidence

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<v Speaker 1>that Barkley's compliance unit wasn't effective in this particular matter.

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<v Speaker 1>So that's why, at least as of now, uh, it's

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<v Speaker 1>a you know, prudential or regulatory oversight problem. Well, why

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<v Speaker 1>would a CEO like Jess Staley who comes in trying

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<v Speaker 1>to sort of clean up the reputation of a bank,

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<v Speaker 1>I think that it's okay to try to get around

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<v Speaker 1>whistleblower protections in this way. Well, according to the Barkley statement, um, uh,

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<v Speaker 1>Staley the second time around thought that the matter had

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<v Speaker 1>passed or said you know that, uh, that he thought

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<v Speaker 1>it was okay for him to try a second time.

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<v Speaker 1>So you know that clearly even if that and we

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<v Speaker 1>assume that's true, but that still shows a weakness in

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<v Speaker 1>the in the in the oversight process that it wasn't

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<v Speaker 1>made clear to him that no, this is uh you know,

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<v Speaker 1>this is an area you can't go into. Um. Another

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<v Speaker 1>aspect of the Barclay's disclosure is that, uh, you know,

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<v Speaker 1>it was viewed as a personal attack on someone who's

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<v Speaker 1>a senior executive at the bank. And again, it doesn't

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<v Speaker 1>matter if there's any merit to it. Uh, it's you know,

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<v Speaker 1>obviously crossing the line to go and try to unmask

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<v Speaker 1>someone involved with that. And if the f c A

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<v Speaker 1>deems that he is not fit and proper to lead

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<v Speaker 1>the firm, he could be banned from the industry. What

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<v Speaker 1>kind of evidence would lead them to make that kind

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<v Speaker 1>of a determination. I think, uh, they would need clear evidence. Um,

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<v Speaker 1>i'm i'm I'm guessing this. This is just an educated guest,

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<v Speaker 1>clear evidence that he he willfully went against uh uh,

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<v Speaker 1>the recommendation of you know, internal internal lawyers, And that's

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<v Speaker 1>very difficult. It's it's like, you know, you have to

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<v Speaker 1>be inside his mind. And they've said clearly that he

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<v Speaker 1>thought and the board has accepted his explanation that he

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<v Speaker 1>thought that period had passed and it was okay, uh

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<v Speaker 1>during his second effort. So I think for a regulator

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<v Speaker 1>to actually find fault with him, they would have to

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<v Speaker 1>somehow disprove that, which would not only be very bad

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<v Speaker 1>for him, it would be very bad for the board,

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<v Speaker 1>which has accepted that. So, you know, it's it's not

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<v Speaker 1>an easy thing for a regulatory authority to prove that. Well,

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<v Speaker 1>if the regulatory authorities find that, you know, he committed

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<v Speaker 1>some kind of wrongdoing here and the bank's procedures weren't

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<v Speaker 1>good enough. What kind of sanctions can we expect, Well,

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<v Speaker 1>certainly financial penalties already it's a huge embarrassment to the

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<v Speaker 1>bank and uh to Mr Staley himself. So you know

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<v Speaker 1>that's that's that in itself, this is a punishment. He's

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<v Speaker 1>already seen his bonus cut down. Um, it's it's undermined

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<v Speaker 1>one of pillars of you know, his promise to restore

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<v Speaker 1>you know, cultural integrity to the bank, which he made

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<v Speaker 1>a year and a half ago when he took over.

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<v Speaker 1>So there's a certain amount of this in the marketplace.

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<v Speaker 1>That is, you know, he is suffering for and the

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<v Speaker 1>bank is suffering for. On top of that, you know,

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<v Speaker 1>there could be regulatory fines and and some other you know,

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<v Speaker 1>some other sanctions related to him. That's Craig Farrell, Bloomberg

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<v Speaker 1>News investigative reporter, on the troubles facing Jeff Daly of

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<v Speaker 1>Barclays in the wake of disclosures that he improperly sought

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<v Speaker 1>to unmask a whistleblower. Thanks for being here.