Ian Drysdale, a former foreign exchange (“FX”) trader of the Royal Bank of Scotland (“RBS”) fired for gross misconduct for exchanging confidential information with traders at other banks had his
case heard for his claim for unfair dismissal at the London Employment Tribunals last week.
Mr Drysdale claims he was a scapegoat for RBS who “dishonestly contrived” his dismissal to divert attention from its own failings and is one of several former traders sacked
in the wake of the investigations into alleged foreign exchange and LIBOR interest rate manipulation who are now suing their former employees for unfair dismissal.
In November 2014 the Financial Conduct Authority (“FCA”) fined RBS £217,000,000 for its failure to adequately control its London voice trading operations in the FX market.
The FX market allows participants to buy, sell, exchange and speculate on currencies and is one of the largest financial markets in the world. This market includes transactions involving the exchange of currencies between two parties at an agreed rate for
settlement on a spot date. Benchmarks are set in the spot FX market are used to establish relative values of different currencies globally. Benchmarks such as 1:15pm ECB fix and the 4pm WM Reuters fix are used in the valuation and performance management of
The investigation by the FCA found that FX traders at RBS and other banks such as Citibank, HSBC, JP Morgan and RBS used ‘chat’ rooms to discuss their net orders ahead
of fixes and formed close groups. Whilst the use of these chatrooms was not always inappropriate, the investigation identified some FX traders disclosing and receiving confidential information to and from traders at other banks regarding the size and direction
of their next order at a forthcoming fix. These disclosures provided the traders with more information than they otherwise would have had about other bank’s net order and consequently the likely direction of the fix. These traders then used this information
to determine their trading strategy and thus manipulate the fix.
The Tribunal heard details of conversations Mr Drysdale had with other FX traders at Barclays, Credit Suisse and JP Morgan during the course of his employment which RBS
claim shows that Mr Drysdale was disclosing confidential information in an attempt to manipulate interest rates.
The conversations between the FX traders immediately prior to fixes discussed net orders and included comments such as “all we need is for Matt to join the club”, “4 lemons
jackpot”, “chink chink” and references to “red” referring to the Russian Central Bank which RBS disclosed as part of their investigation into the allegation of gross misconduct for revealing confidential information against Mr Drysdale.
Mr Drysdale denies any wrongdoing and stated “I do not believe that a fair investigation was undertaken: a process was adopted entirely with the intension to dismiss me.
Senior people in the respondent (RBS) have colluded to give a different impression”.
Andrew Cross, RBS Director of Enterprise-Wide Risk conducted the internal appeal following Mr Drysdale’s dismissal stated in evidence to the Tribunal that “I didn’t get
the sense that the claimant (Mr Drysdale) adapted his behaviour at any point, despite a clear tightening of conduct standards across the industry”…”He was consciously doing things that were the wrong side of the line”.
In closing submission, Ms Davies on behalf of Mr Drysdale submitted that the investigation by RBS was inadequate and that RBS had failed to provide evidence to the Tribunal
as to what the common practice of FX traders was at the time of these trades in 2010 to 2012 and what knowledge or awareness of policies in force FX traders had at the relevant time.
Mr Drysdale is seeking re-employment by the bank as he claims he has been advised that there is no prospect he would be employed as an FX trader whilst his dismissal remained
in place. Former Citigroup FX trader Perry Simpson also fired in the wake of the FCA investigation also claims he was unfairly dismissed and alleges that the sharing of client information was widespread and condoned by senior management at the time.
The decision is of the Tribunal is not expected for several weeks.
(The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal advice
should be obtained before taking, or refraining from taking, any action as a result of this article.)