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Staley facing financial services ban, $2.3 million fine

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FCA accuses Staley of 'downplaying' closeness to Epstein

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Former Barclays ( JJCTF ) CEO denies allegations

(Recasts after start of hearing, adds details in paragraphs 2,

6-9, 10-16)

By Sam Tobin

LONDON, March 3 (Reuters) - Former Barclays

boss Jes Staley should be banned from Britain's finance industry

for misleading statements about his relationship with disgraced

financier Jeffrey Epstein, the UK's Financial Conduct Authority

said on Monday.

Staley, 68, appeared in court flanked by his lawyers as

his appeal against the FCA's proposed ban and 1.8 million-pound

($2.3 million) fine began at London's Upper Tribunal, in a

high-stakes bid to salvage his reputation.

Staley - also a former executive at JPMorgan ( JPM ), where

Epstein was once a major private banking client - has been

battling to clear his name since 2021, when he left Barclays ( JJCTF )

under a cloud caused by his past association with Epstein.

The FCA said in 2023 that it intended to ban Staley over a

letter sent by Barclays ( JJCTF ) to the watchdog in 2019, shortly after

Epstein died in jail awaiting trial for sex trafficking.

The FCA says the letter contained two misleading statements

about how close Staley was to Epstein and that his last contact

with Epstein was "well before he joined Barclays ( JJCTF ) in 2015".

Staley says both statements were accurate, arguing his

relationship with Epstein was a professional one and that emails

Epstein sent to Staley's daughter in 2016 and 2017 do not amount

to Staley having contact with him.

The FCA's lawyer Leigh-Ann Mulcahy said on Monday that

the watchdog does not allege Staley was aware of Epstein's

crimes after his 2008 conviction and that its case was "not

about whether Mr Staley was entitled to have a relationship with

Mr Epstein".

She said in court filings, however, that the FCA alleges

Staley acted "recklessly and without integrity" by allowing the

letter to be sent with the misleading statements.

"Mr Staley has consistently mis-stated the nature of his

relationship with Mr Epstein, in particular downplaying the

closeness and extent of their connection, and the time they

ceased contact," she added.

OVER 1,000 EMAILS

The FCA's case largely centres on a cache of over 1,000

emails between Staley and Epstein, some provided by JPMorgan ( JPM ) and

others from Epstein's estate, in which Staley described their

friendship as "profound" and referred to Epstein as "family".

Staley emailed Epstein after Epstein was convicted in

Florida of soliciting a minor for prostitution in 2008, saying

"I miss you", and visited Epstein on work release from prison in

2009.

The FCA says the emails also show Staley passed

non-public information to Epstein while at JPMorgan ( JPM ) and updated

Epstein on his interview process for the Barclays ( JJCTF ) CEO job in

2015.

"While the origin of the relationship was professional, it

evolved into a personal relationship," Mulcahy said.

Staley's lawyer Robert Smith said in court filings,

however, that Staley had a "close professional relationship"

with Epstein but they were not friends.

He argued the letter sent by Barclays Chair Nigel Higgins to

the FCA was "intended to achieve only one purpose, which was to

inform the (FCA) that neither Mr Staley nor Barclays ( JJCTF ) had had any

knowledge of or involvement in Mr Epstein's unlawful conduct".

Smith added that the letter was not meant to give a full

account of Staley's relationship with Epstein.

Staley's appeal will hear evidence from Bank of England

Governor Andrew Bailey, who was FCA chief executive between 2016

and 2020, and Higgins.

It will also feature references to some of Epstein's other

well-known associates, such as Britain's Prince Andrew and Peter

Mandelson, now British ambassador in Washington.

Staley will be cross-examined next week while JPMorgan ( JPM ),

which in 2023 settled with Staley in the U.S. Virgin Islands, is

also represented at the hearing.

($1 = 0.7942 pounds)