The UK's Financial Conduct Authority and Prudential Regulation Authority are investigating Barclays to see whether Jes Staley, the group's CEO, broke any rules when trying to expose the identity of someone who was trying to uncover wrongdoing anonymously.

According to a cryptic press release, which Barclays is offering as its sole comment on the matter, the group's main board commissioned the City law firm of Simmons & Simmons early this year to conduct a review of Staley's putatively intimidating activity. It discerned the following.

Letter from America

In June last year, members of the board received an anonymous letter, and a senior executive received another anonymous letter, regarding a senior employee whom Barclays had taken on earlier that year. The letters raised misgivings of a personal nature about the senior employee, about Staley's knowledge of and method of dealing with "those issues" (presumably this phrase refers to the faults that the employee has always had) "at a previous employer" (a phrase that suggests that Staley had encountered him/her earlier, perhaps at JP Morgan, the bank at which he spent most of his career, or perhaps at BlueMountain more recently, or perhaps elsewhere) and the channels through which Barclays acquired him/her.

The group compliance function logged both letters as 'whistleblows' and investigated them.

Having received a copy of the first letter and been told about the second, Staley asked Barclays' security people to find out who wrote them. He regarded the letters as an unfair personal attack on the senior employee. Simmons & Simmons believes that he had an "honestly held, but mistaken, belief" that he had the authority to identify the author of one of the letters.

Someone at Barclays later told Staley that he should not have done this, so he and the security people took no further action until July, when he asked someone (the Barclays press release does not say whom) whether the "whistleblowing issue," as the bank calls it, had been dealt with. The press release is silent about the mysterious person's reply. It does suggest, however, that this phone call encouraged Staley to believe that "he had clearance to identify the author of one of the letters."

Thereafter, Staley asked the security people to identify the author of the first letter. They enlisted the help of a US law enforcement agency, but all to no avail. Nobody at Barclays tried to identify the person after that.

View from the FCA

Compliance Matters contacted the FCA. A spokesman said that the agency was indeed investigating Barclays and its CEO over the latter's attempts last year to unmask a whistleblower who had raised questions about a recently recruited senior executive. He also said that the PRA was investigating as well, adding: "This is because, under the Senior Managers' Regime, he's approved by the PRA and not just by the FCA. There is a certain cross-over between the remits of the two regulators. There are dual-regulated firms. The PRA is the prudential regulator of about 3,000 firms that we regulate for conduct. All the other firms are solo-regulated by the FCA - these are large asset managers, IFAs, stockbrokers etc."

The spokesman was also able to say that the bank informed his agency off its own bat, after the Simmons & Simmons enquiry had bourne fruit. When asked what rule Staley might have broken, if any, he replied: "This is what the investigation will look into. There are obviously rules around anyonymity in the whistle-blowing process."

A tip-off about a tip-off

Barclays says that its board commissioned the law firm to conduct an enquiry after "as a result of a concern raised by an employee regarding amongst other matters the adequacy of Barclays whistleblowing procedures." It notified the regulators as it was doing so, perhaps not realising the eventual repercussions of the enquiries.

Staley's sanction

A particular palaverous part of the press release deals with the likely repercussions for Staley. The board seems to have found no fault with Simmons & Simmons' conclusion that he made an honest mistake, but it is punishing him for involving himself in the matter and for "not applying appropriate governance around it." It is reprimanding him formally and wants to make a "very significant adjustment" to his "variable compensation," which suggests that he will still be receiving some form of bonus at the end of the tax year. The severity of his punishment will depend on what the regulators uncover. The board at Barclays is also commissioning independent reviews of the bank's so-called "whistleblowing programme."

The most tantalysing phrase in the press release comes at the end: "The board continues to review the position of other employees involved in this matter." As these people are obviously lower down the food chain than Staley, they might face the sack rather than the removal of a segment of their bonuses, if indeed they are eligible for any. Such people might reside in the group compliance function, which investigated the letters and ought to have (and, indeed, might well have) told everybody that further enquiries were against the FCA's rules. Others might reside in the unidentified department with which Staley had his shadowy phone call in July, after which he formed a belief that it was permissible to try to identify at least one of the telltales.