Barclays said Thursday that UK financial regulators are investigating the relationship between James E. Staley, its managing director, and Jeffrey Epstein, the financier, who killed himself last August after being exposed to new allegations of sex trafficking with underage girls.
In a statement filed with the London Stock Exchange, the UK bank said that the Financial Conduct Authority and the Prudential Regulation Authority had initiated an investigation into the ongoing relationship.
"As has been widely reported, Mr. Staley developed a professional relationship with Mr. Epstein early in his career," the statement said. Barclays added that Mr. Staley, known as Jes, informed the bank that he had no contact with Mr. Epstein after taking top position with the lender in December 2015.
In his filing, Barclays said regulators were investigating how Mr. Staley characterized Mr. Epstein's relationship with the company and what the company subsequently told the Financial Conduct Authority about it.
The statement said in Barclays: "Mr. Staley is sufficiently transparent to the company regarding the nature and scope of his relationship with Mr. Epstein." Mr. Staley retained the full confidence of the bank's board of directors.
The bank's shares were down 2.6 percent on Thursday.
Mr. Staley had known Mr. Epstein since at least 1999 when the future Barclays boss ran JPMorgan's Wall Street Bank private banking business. He was one of the few prominent Wall Street financiers associated with Mr. Epstein, who was indispensable to corporate executives and built a small but powerful financial network.
The relationship was good enough that Mr. Staley visited Mr. Epstein about 10 years ago while spending time in Florida to solicit prostitution from a minor. The visit took place in Mr. Epstein's Palm Beach office, where he served part of his 13-month sentence. Over the years, Mr. Epstein referred dozens of wealthy customers to Mr. Staley and JPMorgan.
Among other things, Mr. Epstein linked Mr. Staley to Glenn Dubin, who headed Highbridge Capital Management, a hedge fund in which JPMorgan acquired a majority stake in 2004. The deal made Mr. Staley's JPMorgan wealth management division a major player in the hedge fund world.
Mr. Staley became C.E.O. from Barclays in 2015 and became the fifth managing director in about seven years at a bank that had suffered from it regulatory problems and involvement in the Libor rigging scandal.
He reshaped the bank, cut costs and increased the company's commitment to investment banking. His tenure was also characterized by a number of questions about his judgment.
In 2016, he tried to expose a whistleblower who had criticized one of his executives. That led on a $ 15 million fine from the New York banking regulator, who said it discovered "deficiencies in governance, controls, and corporate culture" at the bank. British banking regulators fined Mr. Staley approximately $ 1.5 million and asked the bank to report on parts of its whistleblowing program.
Mr. Staley also fell in love with an email from a prankster who claimed to be the chairman of Barclays, and upset a large customer, Kohlberg Kravis Roberts, after trying to help his brother-in-law's business interests. These stumbling blocks have prompted some shareholders to call for his resignation.
In August, Mr. Epstein committed suicide in a Manhattan prison, awaiting trial for sexual trade and federal conspiracy. He had been accused by Manhattan prosecutors in July of sexually exploiting dozens of women and girls in New York and Florida.
These allegations concerned actions up to 2005. A. The lawsuit filed last month by Denise N. George, Attorney General of the Virgin Islands, provided further evidence that Mr. Epstein had sexually abused and traded hundreds of young women and girls on his private Caribbean island, some not until 2018.