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Forget Unfair Dismissal…Whistle Blowing is the New Black

If losing a series of cases to former FX
traders wasn’t enough, the banking industry faces increased pressure from a
growing number of traders seeking whistle blower status as part of a claim for
unfair dismissal.

& Loss
has already reported on BNP Paribas
facing a claim from former head of FX trading Bob De Groot and now, De Groot’s
former employer, Citi, which has lost two unfair dismissal cases, and now
facing its own whistle blower case.

A filing at the East London Employment
Tribunal shows that Citi’s former head of interest rate structuring, Marco
Arosio, is bringing an action against the bank to be heard on May 10,11 and 13.
According to a report from Reuters,
in the filing Arosio is claiming unfair dismissal due to exercising rights
under the UK Public Interest Disclosure Act, part of which relates to whistle

Unlike a straightforward unfair dismissal
case, which has an upper limit around GBP 78,000, a claimant achieving whistle
blower status has no limit on the amount of the compensation should they win
the case.

Arosio’s case creates a further headache
for Citi with the bank already having faced claims in other cases that its
senior management condoned information sharing in chat rooms, front ran large
client orders and attempted to trigger large stop loss orders or barrier

Whistle blowing cases are potentially much
more embarrassing for banks because a key element of the case will be the
alleged bad practices supposedly witnessed by the claimant. They also bring the
pressure of a potential Financial Conduct Authority (FCA) investigation if the
claimant chooses to pass their files to the regulator.

One unfair dismissal case to have been
settled so far involved whistle blowing claims, and while Paul Carlier, the
former trader who brought an action against Lloyds failed to achieve whistle
blower status, he did win the case when the bank suddenly decided against
continuing with the action. The bank stated at the time that its decision to
end the case and pay Carlier in full, including costs, should not be seen as an
admission it was wrong to bring the action; however, it is hard not to view the
decision as one taken to avoid further potentially embarrassing and damaging

Carlier has filed papers with the FCA,
which now has a duty to investigate, if De Groot and Arosio do the same, the
banks could be facing a new campaign from former traders on a new, and
potentially much more damaging, front.

Twitter @lamboPnL

Twitter @Profit_and_Loss

Colin Lambert

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