Profit & Loss understands that David Fotheringhame, former head of automated flow trading at Barclays, has won his claim for unfair dismissal against the bank.
Sources familiar with the matter say that a judgement to be made public later this week, will find Fotheringhame was unfairly dismissed, although the judge at East London Employment Tribunal has decided that he was 20% to blame for his own dismissal and ordered the settlement and compensation be appropriately adjusted.
Fotheringhame claimed that Barclays sacked him in an effort to appease the New York Department of Financial Services (DFS), which fined the bank $150 million in November 2015. In the final decision released by DFS, the authority states, “The Department orders the Bank to take all steps necessary to terminate this individual [Fotheringhame], who played a role in the misconduct discussed in this Consent Order.”
The DFS claimed that Barclays was less than transparent with its clients over the use of last look and also that Fotheringhame instructed his staff not to discuss the issue with Barclays’ sales teams.
The judge heard that Barclays sought to dismiss Fotheringhame on seven counts, they were broadly that he used “injudicious or inappropriate language in communications (allegation 1); showed a lack of transparency about Last Look and encouraged his team to do the same, in a way which fostered a distrustful and “closed” environment which was not professional, transparent or collaborative (allegations 2 and 3 against him); had a negative attitude towards clients and misused last look as a profit opportunity (allegation 4); contributed to misleading marketing material around stop losses on Powerfill (allegation 5); failed to drive forward the plan to make BATS (Barclays Automated Trading System and BARX symmetrical (allegation 6); and failed to implement appropriate systems and controls (allegation 7).
In his decision, the judge points to evidence that suggested the number of ‘problematic’ communications was relatively small when balanced with the overall population of communications reviewed by an internal Barclays investigation. She also notes that an internal communication with Fotheringhame says, “There are many examples of open and transparent communications with BARX users about rejects and Last Look, as well as examples of clients negotiating or seeking to negotiate their Last Look settings – suggesting a high degree of awareness amongst customers of Last Look and its relevance to their order flow.”
The judge also finds that the sales teams were “generally aware” of last look, and that the practice has been “commonly understood” for many years. The judgement also observes that the clients affected by rejections were overwhelmingly the most sophisticated BARX counterparties and, therefore, the group most likely to take advantage of any information about Barclays’ Last Look settings to the detriment of Barclays (and BARX pricing). “With that in mind, it may have been appropriate to withhold information in order to maintain the integrity of Last Look as a legitimate defensive tool for Barclays,” it states.
More importantly, the judge finds that people responsible for the dismissal hearings and internal investigations at Barclays were aware of the DFS order, which was specifically referred to in an email discussing the issue. She also highlights “troubling contradictions” in testimony to the hearing from those responsible for the disciplinary process.
The judgement is due to be released later this week and a remedy hearing is set for mid-May.