Barclays ‘Cartel’ Trader Blames Bank

Former Barclays head of spot voice FX trading Chris Ashton claims
he was “scapegoated” by the firm in the wake of the investigations of the Financial
Conduct Authority (FCA) into alleged manipulation of FX rates, and that he was
first “put in the line of fire” and then sacked for repeatedly blowing the
whistle, an East London employment tribunal heard Tuesday.

Ashton appeared at the tribunal to provide testimony in his
claim against Barclays for unfair dismissal and whistleblowing after he was
fired from the bank in May 2015 following a lengthy suspension and an internal
inquiry by a Barclays disciplinary committee which started in January 2015.

The former trader was one of the members of a traders’
chatroom known as “The Cartel”, the members of which have been
accused of colluding to manipulate foreign exchange benchmark rates.

A number of banks were involved in the FX rigging probe,
which led to fines and out of court settlements totalling billions of dollars.

Ashton previously lost a complaint at the UK court about
whether he had been improperly identified in regulatory settlements related to
the scandal.

As part of the proceedings, in a statement given to the
tribunal, Ashton said that he was fired for “making protected disclosures that
Barclays had insufficient, or in some cases, no policies at all regarding for
example, confidentiality, which were tailored to the FX business” as early as
2012.

He claimed his dismissal was directly linked to him having
raised “concerns that would later be disclosed to regulators worldwide” and alleged
that he was later promoted “to a role that didn’t exist to provide a scapegoat
for the company”. He further claimed that he was “put in a role directly in the
line of fire so that others might escape liability”.

Ashton told the tribunal that his conduct was “commended,
accepted and condoned, incentivised and encouraged by Barclays” up to his
dismissal.

He also claimed that the company would “hold me to standards
that did not apply in the relevant years of 2006-2013” he said, labelling the
disciplinary and appeal process to which he was subjected ahead of his eventual
suspension and dismissal “a sham process”, in which his arguments were not
considered.

Specifically, Ashton argued that the firm had looked at a
limited number of samples of his chats to decide his suspension, out of “million
upon million of lines” that he had produced over his several years-long career
in the FX division at the company.

“Plugged Into the
Trader Mumble”

In his testimony, Ashton recalls how he was hired in 2006 because
of his being “connected to the market” and claimed how it was a precise
strategy of Barclays that the voice trading division should focus on “content”
and sharing “market colour” with clients, in response to the challenges posed
by the growth in electronic trading.

He said that in a conversation with a senior manager in 2012,
he was told the company didn’t want to hire people who were “not plugged into
the mumble”, which was evidence, he claims, that the mentality which encouraged
the sharing of information was still in place at that point.

Questioned by Barclays’ lawyer, he agreed that abiding to
confidentiality was a key responsibility of his role as head of voice trading.

However, he denied having breached any of Barclays’
policies, and pointed to samples of his chats that had been approved by the
bank’s compliance team, as well as noted that his manager had been part of many
of these conversations as further evidence that the company was aware of the
tone used in chatrooms.

The disciplinary committee upheld five out of six
allegations against Ashton. These were: disclosure of clients’ and Barclays’
confidential information to other players; attempt to influence FX spot rates; that
he had been aware but had not addressed the behaviour of other traders who may
have disclosed confidential information or attempted to influence FX rates;
failure to supervise team members; engaging in behaviour potentially damaging
to Barclays reputation; and engaging in behaviour potentially contrary to
Barclays’ clients’ interest.
 

The committee couldn’t definitively prove the second
allegation, that Ashton had intended to influence FX rates, although
information shared would have helped if the traders involved had wished to do
so,
according to what was stated at a previous hearing of the case by Justin Bull, Barclays’s former global chief operating officer, who co-chaired Ashton’s
disciplinary hearing at the bank. Bull had appeared to testify at the East London employment tribunal on July 13.

Discussing the level of information shared with other market
players in chatrooms, Ashton insisted this was related to the need to “net”
positions. Answering questions from Barclays’ lawyer, he denied that price
movements derived from executing the 4pm London Fix equalled an attempt to
deliberately move the Fix levels.

In his testimony, he added that “buying and selling in FX
market ahead of 4pm does not inevitably amount to what Barclays calls “front-running”
and that “pre-hedging was a necessary exercise in risk management”.

Ashton’s claim’s proceedings at the East London employment
tribunal are ongoing.

Beatrice Bedeschi

Beatrice@profit-loss.com

Twitter@Profit_and_Loss

 

Beatrice Bedeschi

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