Employment in the financial sector: spotlight

The financial sector has seen its fair share of cases of discrimination and the trend continues.

In Lacatus v Barclays Executive Services Limited the Labor Court turned to sexism. A Rates Options Structured Trading Middle Office analyst has filed a number of complaints against the bank, including a gender discrimination and harassment complaint centered on her supervisor’s repeated use of the word “bird” to describe a woman. When the claimant objected to the use of this term, the manager said she should not “report it to HR”.

The court concluded that the term had clearly been used as part of “jokes” exchanged within the team with the intention of being humorous and that the manager eventually stopped using the term following the plaintiff’s objections . However, the Tribunal found that it was reasonable for the claimant to have viewed the language as a disadvantage and that it was “obviously sexist”. Therefore, it amounted to direct discrimination based on sex. The Tribunal noted that sometimes things said ironically can sound quite different “in the cold light of the courtroom.” It is for this reason that any form of “joking” relating to a protected characteristic should be avoided and staff should be trained in equality and diversity. With regard to the latter, such training must be repeated regularly to prevent it from being lost following a case of Allay (UK) Ltd v Gehlen.

The Claimant was also disabled due to endometriosis and anxiety. The court concluded that being required to work long hours put her at a great disadvantage because of these disabilities. The bank’s failure to reduce its working hours was therefore a failure to make reasonable adjustments.

Comment

That calling women “birds” has the capacity to be sexist, if not outright sexist, seems pretty obvious. However, one would assume that, given the context (the relevant manager has stopped using the term), this will result in a relatively small award for injury to feelings. What we found more interesting were the findings relating to anxiety, that it was a disability and that the bank should have made reasonable adjustments to accommodate that disability. Given that financial services can generally be a stressful work environment, with incredible pressures on people working long hours, this demonstrates that responding to such complaints should be taken seriously.

Two interesting cases of wrongful dismissal demonstrate how the courts can play an important role in analyzing the practices and strategy of a financial institution. They are Jones v JP Morgan Securities plc and Volkova v Credit Suisse (UK) Ltd and others.

In Jones v JP Morgan Securities plc, a wrongful dismissal claim was successful after a former trader claimed he was wrongfully terminated by the investment bank. The bank had wanted to show it was taking a tougher line in an identity theft scandal when a number of its employees became involved in a criminal investigation by the US Department of Justice, leading to conspiracy charges and fraud cases brought in 2019 that allegedly cost nearly $1. billion (£724 million) in penalties.

The Respondent took action after the Plaintiff entered and then deleted two stock sell orders in quick succession on January 6, 2016, which the bank’s systems immediately flagged as potential market abuse. During a brief investigation at the time, the Claimant said he could not recall the reason for his actions, which were reported as an isolated incident involving someone with an unblemished record. At the time, the bank concluded that no disciplinary action was warranted and said staff should undergo training and various other safeguards had been introduced. The court found that at the time of the incident, the bank had declared that the plaintiff was not guilty of impersonation and that no suspicious transactions had been reported to the FCA. Further, the Respondent continued to certify that the Claimant was fit and suitable.

Following the introduction of a new impersonation policy which provided that a breach would occur if the business activity was “potentially consistent with impersonation”, even if there was no no other evidence of improper intent. This new policy was applied retrospectively, leading to the plaintiff’s suspension in 2019. The court found that the investment bank had “changed its approach to the 2016 sell orders due to its desire to appease its regulators by showing that she was “cleaning up her act”. ”. The bank dismissed the plaintiff for serious misconduct. On the same day he was made redundant, by a twist of fate, the plaintiff was informed that the bank had notified CAF that he was fit and fit to perform his role. In the alternative, the bank argued in court that the dismissal was due to another material reason – namely, a breach of trust or that the bank was unable to certify that the plaintiff was fit and able to perform his role. In a pretty damning judgment, the Court tore up the bank’s defense, finding that the bank didn’t even have just cause for the dismissal. The court concluded that the reason for the termination was simply to appease regulators.

What is spoofing? When a trader places a bid or offer but with the intention of canceling the bid or offer before execution, in order to give the impression that the demand or supply for a particular product is different what she really is. The purpose of spoofing may be to cause a change in the price of a particular product, which the trader can then use to his advantage by trading at the new price. However, the purpose of spoofing may not be to change the price at which a commodity is traded, but simply to increase the liquidity available at the prevailing price.

Comment

The Investment Bank will no doubt be disappointed by this decision, but may consider that it was preferable to show that it was fighting against historic actions of spoofing rather than submit to the appointment of an independent compliance monitor. However, reviews of alleged “historic” acts of misconduct that have already been reviewed by an organization are highly unlikely to find favor in an employment tribunal.

In Volkova v Credit Suisse (UK) Ltd and others a banker who made an “inappropriate” transaction that resulted in financial loss has been unjustly fired due to delays in the investigation process. In August 2018, the plaintiff went behind the back of heightened surveillance measures to complete an exchange for a wealthy Russian individual. The cancellation of the transaction by the bank resulted in the loss of 22,000 Swiss francs (£17,300). The bank argued that the transaction also risked damage to its reputation, potentially exposed the customer to losses and could have resulted in a complaint or claim by the customer against the bank. In September 2018, the plaintiff filed a grievance alleging unfavorable management. In March 2019, disciplinary proceedings began. It was only concluded in January 2020 (some nine months later) due to an “overly” detailed investigation by the bank. The claimant was fired for gross misconduct in January 2020.

The Tribunal agreed with the bank on all substantive issues and found that the claimant acted “dishonestly and without integrity, deliberately misleading colleagues and disobeying reasonable instructions”. Plaintiff’s whistleblower allegations of alleged poor training, misrepresentation to regulatory authorities, and failure to provide a safe and bullying-free workplace were dismissed. However, the court ruled that the dismissal was unfair because the disciplinary proceedings had been “unjustifiably delayed” by the bank. No reasonable employer would have taken so long to conclude the investigation. The slowness of the process put the claimant’s work activities “on hold” because she had been placed in restricted duties, which all of her co-workers knew. The unreasonableness was further compounded by the fact that the bank knew the Claimant’s health was deteriorating and found the process extremely stressful. We have concluded that this is one of the rare cases where excessive and unjustifiable delay alone made the dismissal wrongful.

Comment

This case highlights the need for employers to conduct and conclude investigations quickly. The ACAS Code (which courts must consider when determining whether or not an employer acted reasonably) states that employers must “deal with matters promptly and must not unreasonably delay meetings, decisions, or the confirmation of such decisions.” “. However, this was a somewhat Pyrrhic victory for the claimant, as a failure on procedural grounds will not result in the maximum award. One would suspect that the bank might be sufficiently pleased with this outcome – and especially since any compensation will be significantly reduced due to the plaintiff’s conduct.

CIF case:

  • Ian Hudson was jailed for four years for fraudulent trading in violation of s19 FMSA. His company, Richmond Associates, used clients’ money to reimburse former clients or make payments for others. On occasion, Mr. Hudson simply used client funds for his own personal purposes. The confiscation proceedings are being continued by the FCA.
  • Richard Faithfull was sentenced to 5 years and 10 months in prison for laundering £2.5million. Mr Faithfull paid fictitious “dividends” into bank accounts he controlled to give the impression that the underlying investments were generating returns. The FCA will now pursue forfeiture proceedings against him in an attempt to seize his illegal earnings.

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