Fotheringhame wins Barclays employment claim

Former Barclays managing director David Fotheringhame has won an employment tribunal case against his former employer, with a UK judge ruling the bank unfairly dismissed him from his $1 million-a-year role in December 2016, FX Week can exclusively reveal.

Fotheringhame entered the unfair dismissal claim against Barclays in March 2017, and hearings were held in January.

He was dismissed from Barclays in December 2016, after the bank entered into a consent order relating to the use of last look on its platform, which specified it should take all steps to dismiss Fotheringhame.

“The respondent dismissed the claimant unfairly,” the judgement reads.

The court found Barclays would not have dismissed Fotheringhame had it acted fairly, but it added that he contributed to his dismissal in the order of 20%. A remedy hearing will be held on May 9-11.

Fotheringhame was global head of automated flow trading within Barclays’ electronic, fixed-income, currencies and commodities (e-Ficc) business until the beginning of a disciplinary action against him on November 30, 2015, which led to his dismissal with notice for alleged misconduct.

The firing of Fotheringhame came shortly after the US Department of Financial Services (DFS) began an investigation into allegations of misconduct in the bank’s electronic trading business, relating to last look. This resulted in Barclays entering into a consent order with the regulator to the tune of $150 million in November 2015.

The respondent dismissed the claimant unfairly

The judgement

As part of the consent order, Barclays agreed to take all steps necessary to terminate the employment of Fotheringhame, who was referred to in the order as a Barclays managing director and global head of e-Ficc automated flow trading.

Fotheringhame’s job was later terminated, but he filed a claim in 2017, asserting Barclays could not have reasonably believed he was guilty of misconduct, but instead he was sacrificed by the bank as part of efforts to appease the DFS.

During the tribunal hearing, Barclays said it dismissed Fotheringhame due to a lack of transparency regarding last look, for fostering a distrustful and closed environment, having a negative attitude towards clients, and for failing to drive forward a plan to make the use of last look symmetrical on the bank’s single-dealer platform. It also said that he failed to implement adequate systems and controls as part of his job.

Since his dismissal, Fotheringhame has not worked in the financial industry, despite his most recent job at Barclays netting him more than $1 million a year in 2014.

Barclays declined to comment.

No fault

Part of the outcome of the tribunal hinged on whether Fotheringhame applied last look fairly across different clients or whether he aimed to maximise revenue by increasing last look hold times following a technology upgrade, dubbed Project Marlin.

The judgement, however, found Fotheringhame was neither culpable nor blameworthy in applying last look to all clients rather than distinguishing between toxic and benign client types, because his supervisors, Michael Bagguley and Tim Cartledge, approved the move to increase hold times and attempt to generate more income.

The judgement also said that despite criticising Fotheringhame’s behaviour around last look and subjecting him to disciplinary hearings that resulted in his dismissal, Barclays continues to operate similar practices.

“lt seemed to me that the respondent continues to operate many of the practices in relation to last look for which the claimant was criticised. lt does not target only ‘toxic’ trading behaviours,” the judge said.

She pointed to the last look disclosure document provided by the bank to clients, which says the practice is applied in an agnostic way rather than just to toxic clients, and that a market move that causes the price to exceed the bank’s pre-set tolerance levels will result in a rejection.

The judgement goes on to quote from the Barclays document, which explicitly states clients cannot trade electronic spot FX with the bank without last look being applied.

Vital analysis withheld

The judge also decided the bank withheld vital analysis produced in relation to last look statistics, without which Fotheringhame was unable to defend himself effectively during the initial disciplinary hearings.

While clearing Fotheringhame of all but the one accusation that led to his dismissal, the judge noted that despite evidence he attempted to put systems and controls in place to prevent the abuse of last look, his seniority – and the $150 million fine Barclays paid to the New York Department of Financial Services – mean he was, to a limited extent, responsible for failing to protect the bank from serious risk.

As a result, the judge decided to reduce Fotheringhame’s basic and compensatory award by 20%, but purely due to the one allegation regarding systems and controls.

“I decided that the claimant had not undertaken any other action which was culpable and blameworthy,” the judgement concluded.