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Ashton Loss a Rare Win for Banks in FX Cases

News that Chris Ashton, the former Barclays
FX trader dismissed by the bank over misconduct allegations, has lost his claim
for unfair dismissal represents the first outright win for a bank facing such a
claim and, potentially, draws a line in the sand over how participation in chat
room activities is viewed.

reports that Ashton lost his claim in a ruling
dated September 19 as the judge found Barclays took “appropriate action” due to
his “gross misconduct”.

Ashton was a member of the now notorious
Cartel chat room, a factor that probably did not help his case. And while there
may have been some
concerns over the timing
of the release, news in late August that the
Federal Reserve Bank was
seeking a permanent ban and a $1.2 million fine
from Ashton related to his
activities only serves to highlight how this case is different to those that
have come before.

Ashton is widely understood to be one of
the core members of the Cartel and is, to date, the only member to sue for
unfair dismissal. Last year, Ian Drysdale, the former RBS trader who also
participated in the Cartel chat room at some stage, won
his case due to flaws in the bank’s dismissal process
but was denied
financial compensation because the judge believed knew his actions were
“fundamentally wrong”.

Industry sources believe the judgement
against Ashton is significant because it indicates the UK tribunals have
recognised what one source terms, “the line that traders crossed when they
sought to collude”.

Another source agrees, noting that members
of the Cartel actively front ran the WMR 4pm Fix after colluding in the
Bloomberg chat room, whereas the vast majority of traders to have won their
cases were merely exchanging information. “Looking at the Citi cases in
particular where the bank has won, you get the feeling that the traders were
following orders to get information for protective purposes,” the source
suggests. “Members of the Cartel were after information to actively trade on
the back of – it’s basically insider dealing and there’s a world of difference
between that and sharing chatter about a customer’s activities post-trade.”

According to the Bloomberg News report Ashton is considering his options with his
legal representatives, however it is hard to find someone who thinks a wise
option is continuing with the action. A typical response from an attendee at
Forex Network Chicago last week was illustrative and heard, in various forms,
repeatedly. “He was a member of the Cartel, the group that kicked off this
whole mess. The minute someone is exposed as a member of that group they lose
most, if not all, the industry’s sympathy.”

Another attendee adds, “Plenty of players
may have strayed into a grey area around information but few of us sought to
collude to deliberately make money at the direct expense of our customers –
that’s jumping the shark.”

Twitter @lamboPnL

Twitter @Profit_and_Loss

Colin Lambert

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