[2025] UKUT 00185 (TCC)

In relation to the “particular considerations” set out at DEPP 6.4.2 which are identified as being relevant to whether public censure or a penalty is appropriate, it is clear that some of those circumstances apply to the Applicants: they received no financial gain as the result of the breach, and they have no prior disciplinary record; on the other hand, the Applicants did not admit that there was a breach, and there are no exceptional circumstances.

However, as is clear from DEPP 6.4.1 “not all of the factors may be relevant in a particular case”. The key relevant factor in the Applicants’ case is whether the breach was so “serious in nature or degree” that public censure is inappropriate.

We agree with the Authority that publishing an RWA number which was known to be materially incorrect had serious consequences: in particular, investors proceeded under the positive misapprehension that the published RWA figure was reliable when it was not. If a qualified RWA figure had been published instead, investors would have faced a known risk (albeit with an uncertain final outcome) and would have made their investment decisions accordingly.

We do not agree with Mr Jaffey that the Applicants had “little or no culpability” for those serious consequences. They were the only two executive directors of the Bank; the only legal advice obtained related to compliance with the MAR and not to the Q3 Update (see §340), and the information provided to the Audit Committee and the Board downplayed both the CLIP Loan error and the adjustment to the Bank’s RWA that would be necessary to correct it (see §§460-466). We therefore agree with the Authority that this is a case where public censure is insufficient, and we move on to consider penalties.