Barclays investors urged to back board by proxy adviser

Institutional Shareholder Services (ISS) has called on Barclays investors to re-elect all board members at its annual meeting in May, a move that may quell a backlash against bosses for their support of former chief executive Jes Staley as investigations into his alleged links with sex trafficker Jeffrey Epstein continue.

The influential proxy adviser said in a report published on Monday that “questions may be posed” as to the board’s judgment in its decision to back Mr Staley between 2019 and 2021, but it may be premature to consider the voting implications for director elections at this stage.

“Although it is accepted that the board could only have acted based on information available to it at the time ... given how recently events have unfolded, it may be sensible to defer any attempt at answering such questions until further news emerges from ongoing investigations,” ISS said.

Mr Staley is being sued by his former employer JP Morgan in the US, which is attempting to hold him liable for any penalties the US bank might have to pay if it is found to have facilitated Epstein’s sex-trafficking crimes in two high-profile lawsuits.

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Mr Staley, who is alleged in the lawsuits to have “personally observed” Epstein abusing women, and to have “spent time” with young girls at the disgraced financier’s homes, did not disclose this to JPMorgan, the bank claimed in a court filing made in Manhattan federal court last month.

The bank’s complaint against Mr Staley insists the underlying allegations are “misplaced and without merit” but argues that if the lender is found liable then it is Mr Staley who should be on the hook for any damages.

Mr Staley had attempted to have the lawsuit heard separately to the two complaints against the bank by an alleged Epstein victim and the US Virgin Islands, where Epstein had a home. However, a court in New York ruled last week that the former executive would stand trial alongside his former employer as the complaints against Mr Staley were “closely related” to those made in the other civil lawsuits.

[ JPMorgan executives joked about Jeffrey Epstein’s behaviour, US Virgin Islands alleges ]

Mr Staley became chief executive of Barclays in 2015 but resigned six years later following a regulatory investigation in the UK into the way he characterised his relationship with Epstein.

Another Barclays shareholder proxy adviser, Glass Lewis, urged investors earlier this month to vote against pay proposals for the UK banks’ top executives following a year of scandals that has cost the bank hundreds of millions of pounds in fines and settlements.

Barclays was hit with a penalty by regulators last September for accidentally selling $17.7 billion (€16.2 billion) of structured financial products it did not have authorisation for. It settled for $361 million with the US Securities and Exchange Commission and set aside £450 million (€512 million) to compensate investors, helping drive down annual net income by 19 per cent.

Separately, it also set aside $200 million to settle a US regulatory investigation into employees’ unauthorised use of messaging apps WhatsApp and Signal to communicate between themselves and with clients.

As punishment for those and other scandals, the pay of top executives was reduced by a combined £1 million, the bank said in February when it published its full-year results.

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