Long relationship with Jeffrey Epstein sparks fresh regulatory probe into Barclays CEO Jes Staley

February 13, 2020, 9:52 AM UTC

Barclays Plc said British regulators are probing Chief Executive Officer Jes Staley’s account of his ties to Jeffrey Epstein, the financier and convicted sex offender who died last year.

It’s Staley’s second run-in with U.K. regulators since joining the bank in 2015. In 2018, he was fined for his attempts to uncover a whistle-blower.

“I deeply regret having had a relationship with Jeffrey Epstein,” Staley, 63, said on a conference call as Barclays reported fourth-quarter results. Barclays said the CEO retains the “full confidence” of the bank’s board.

Epstein died in prison after he was arrested last year on charges of sex-trafficking minors. Staley, a former senior banker at JPMorgan Chase & Co., was among a swath of prominent financiers whose ties to Epstein came under the spotlight after his arrest. Starting in 2000, Epstein regularly brought Staley business when he ran JPMorgan’s private bank and the two were close professionally, a person familiar with the matter said last year.

“The investigation is actually focused on transparency, and whether I was transparent and open with the bank and with the board with respect to my relationship with Jeffrey Epstein,” Staley said on Bloomberg Television. “It’s clear in my own mind, going all the way back to 2015 when I joined Barclays — I have been very transparent with the bank and have been very willing and open to discuss the relationship that I had with him.”

The probe started in December, Staley said. The lender’s shares fell 2.6% at 8:46 a.m. in London.

The revelation of the probe overshadowed the bank’s fourth-quarter results. Barclays retained its profitability target for 2020, while warning it will be challenging to achieve given macroeconomic uncertainty and low interest rates. The investment bank, the centerpiece of Staley’s strategy since he took over in 2015 — and a frequent target for criticism by activist investor Edward Bramson — posted revenue in line with analysts’ estimates.

“The regulatory review is bound to raise questions regarding potential repercussions for Staley,” said John Cronin, an analyst at Goodbody in Dublin. “This could put Barclays on slightly weaker ground in the context of any renewed push on the part of the activist shareholder.”

Epstein Fallout

Britain’s Financial Conduct Authority and Prudential Regulation Authority confirmed Staley was being investigated, and declined to comment further.

At the beginning of his tenure at Barclays, Staley repeatedly and improperly attempted to unmask the identity of whoever sent letters to members of the bank’s board and another executive. After a year-long regulatory probe into that matter, Staley kept his job, though the FCA and PRA said he failed to behave “with due skill, care and diligence.”

That scandal resulted in a 642,430-pound personal fine ($833,167), about 10% of his annual income. It also resulted in a $15 million fine for the bank from New York regulators.

A Barclays spokesman, Tom Hoskin, said on Thursday’s conference call that “there’s always the option to make an adjustment” to Staley’s compensation, given how pay is deferred for the bank’s directors.

Staley said on Bloomberg TV that his professional ties to Epstein dated to 2000, when he took charge of JPMorgan’s private bank, where the financier was already a client.

Repercussions from the Epstein scandal continue to roil the business and political worlds, given the his decades of cultivating ties to U.S. and British elites. Prominent business people with ties to him include billionaires Glenn Dubin, who has since retired from his hedge fund, and Leslie Wexner, whose L Brands Inc. apparel empire is in talks to be broken up.

Staley helped arrange JPMorgan’s 2004 acquisition of a majority stake in Dubin’s hedge fund, Highbridge Capital Management, a deal that helped elevate Staley within the bank. At the time, Staley ran JPMorgan’s asset management unit.

Staley visited Epstein in Florida when he was serving his sentence following a 2008 guilty plea of soliciting prostitution, in one case with a minor, according to a New York Times report last year. As recently as April 2015, just before he joined Barclays, Staley and his wife visited Epstein for several hours at his private Caribbean island.

Staley said on Thursday that his relationship with Epstein “began to taper off as I left JPM and contact became much less frequent in 2013, 2014,” before ending in 2015.

“Obviously I thought I knew him well, and I didn’t,” Staley said.

More must-read stories from Fortune:

—Stock scammers are using coronavirus to dupe investors, SEC warns
Credit Suisse making a comeback, but spying scandal drags down outlook
Why China is still so susceptible to disease outbreaks
A new coronavirus red flag on the horizon—a stronger dollar
—Fortune Explains: Tariffs and trade wars

Catch up with Data Sheet, Fortune’s daily digest on the business of tech.