DoJ explores whether UK bank broke antitrust rules with a JPMorgan ‘no-poach’ deal
The US Department of Justice is scrutinising whether Barclays breached antitrust laws by promising to stop poaching JPMorgan Chase bankers, in another blow for the British lender’s chief executive, Jes Staley.
The DoJ asked Barclays for more information on discussions between its top brass and senior JPMorgan executives following a string of high-level departures from the US bank to its British rival. The hiring spree followed the appointment of Mr Staley, himself an alumnus of the Wall Street bank, as Barclays’ chief executive in December 2015.
The Financial Times reported last year that Jamie Dimon, the head of JPMorgan, called John McFarlane, Barclays’ chairman, to complain about the defections. The FT also said Mr Staley then spoke to Daniel Pinto, the head of JPMorgan’s investment bank.
The DoJ is examining whether Barclays entered into a so-called “no poach” agreement by promising not to hire more JPMorgan bankers, people familiar with the situation told the FT. Such agreements are illegal under US antitrust laws.
JPMorgan said: “There have been no improper agreements and we continue to hire from each other.” But the US bank declined to comment on whether it had been contacted by the authorities.
Barclays insiders vigorously rejected any suggestion that such an agreement was entered into, or that any promise was made by Mr Staley not to hire any more JPMorgan bankers. They pointed out that since the calls Barclays has hired at least six people from JPMorgan, some at managing director level.
Attention from the DoJ comes after major Barclays shareholders have already warned that their support for Mr Staley is wearing thin after an unrelated investigation was launched by UK regulators into his attempts to unveil the identity of a whistleblower.
No formal investigation regarding ‘no poach’ issues has yet been launched, those people cautioned, and it is common for the DoJ to ask for details then decide no further action is warranted.
While there were requests from the DoJ some months ago, inquiries have gone quiet in recent months, people familiar with the situation said. They added, however, that there had not been any formal notice from the DoJ that they would close the matter.
Defectors from JPMorgan to Barclays last year included Tim Throsby, head of the British group’s corporate and investment bank; Paul Compton, who was named as group chief operating officer; and CS Venkatakrishnan, who became its chief risk officer.
In October, the DoJ published guidance over so-called “no poach” agreements. “Naked wage-fixing or no-poaching agreements among employers, whether entered into directly or through a third-party intermediary, are per se illegal under the antitrust laws,” the guidance reads. “Going forward, the DoJ intends to proceed criminally against naked wage-fixing or no-poaching agreements.”
It is unclear whether the DoJ is weighing a civil or criminal investigation at this time.
UK authorities have decided not to pursue the matter. While potentially anti-competitive under UK law, no-poach agreements are commonplace in UK contracts for mid-to-senior ranking employees, particularly within the financial sector, according to employment-law experts.
That could bring jurisdictional headaches for the DoJ if it did launch an investigation as Mr Staley is based in Barclays’ London headquarters.
Questions about Mr Staley’s judgment have also been raised after it emerged that KKR had blocked Barclays from winning new mandates at the powerful US private equity group in protest at how Mr Staley had taken the side of his brother-in-law in a dispute over a failed Brazilian deal.
He then fell for a spoof email purporting to come from Mr McFarlane following a bruising annual meeting during which Mr Staley apologised for the whistleblower incident. In that matter, an anonymous letter raised concerns about another JPMorgan hire and a friend of Mr Staley, Tim Main.
Barclays and the DoJ declined to comment.
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