Fotheringhame battles to get job back

David Fotheringhame’s fight to get his job back at former employer Barclays kicked off at a London employment tribunal this week, four months after a judge ruled that the managing director was unfairly dismissed.

Fotheringhame is on the warpath to get his more than $1 million-a-year job back at Barclays, or another comparable role. He has earmarked some 18 positions at the bank that he would find appropriate, including the newly created role of head of developer experience.

He is arguing his case at a remedy hearing, scheduled to last until July 20.

But Barclays says the roles that Fotheringhame wants are all required to be filled by individuals who pass the ‘fit and proper person’ test – an outcome that Michelle Kates, global head of employee compliance at Barclays, views as an unlikely one for him.

The bank’s chief technology officer (CTO), Sameer Jain, testified that he will not be interviewing Fotheringhame for the position of head of developer experience.

This is because – despite winning his tribunal case and facing no punitive action from regulators in the UK and the US, including the New York Attorney General and the US Department of Justice – the original order from the New York Department of Financial Services that led to his dismissal continues to have an impact on Fotheringhame.

In November 2015, the NYDFS ordered Barclays to pay $150 million and terminate “its global head of electronic fixed-income, currencies and commodities automated flow trading, due to misconduct related to automated, electronic foreign exchange trading through its last look system”. The role was filled by Fotheringhame at the time.

“A Barclays managing director and global head of electronic fixed-income, currencies and commodities automated flow trading has been suspended, but remains employed by the bank. The department orders the bank to take all steps necessary to terminate this individual, who played a role in the misconduct discussed in this consent order,” the US regulator stated in 2015.

Fotheringhame was suspended, and later dismissed with notice in 2016. But, after entering an unfair dismissal claim against Barclays in March 2017, a UK employment tribunal ruled in his favour in March this year, clearing the way for the ex-managing director to ask for his job back.

London-based Fotheringhame joined Barclays in 2010, as global head of electronic FX spot trading. Previously, he worked in FX algorithmic trading at Nomura for almost two years and held a similar role at Lehman Brothers before that. He began his career on the FX options trading desk at HSBC in 2004.

Regime change

In 2014, Fotheringhame’s role at Barclays paid him an annual compensation of more than £1.1 million and he had a team of nine people directly reporting to him, with some 50 indirect reports in total. At the time, he was an Approved Person under the UK Financial Conduct Authority’s (FCA) regime.

In March 2016, the Approved Persons Regime was replaced by the Senior Managers Regime and the Certification Regime, which led to two key changes relating to Fotheringhame’s case. Before this date, individuals had to get the UK regulator’s approval to be active in financial markets.

Today, in a bid to push more responsibility on to individuals in the market, those below senior-management level who are deemed to be in a position to cause “significant harm to the firm and its customers” are so-called certified staff.

Now, instead of the FCA approving individuals, it is the employing firm that is responsible for ensuring and rubber-stamping the fitness and propriety of certified persons on an annual basis.

Further, any individuals earning more than €500,000 a year are subject to the Certification Regime and are deemed material risk-takers within the institution.

While the FCA guidelines prescribe that firms should assess the appropriateness of applicants on a case-by-case basis, and even allow for people with criminal convictions to be considered for the test, it leaves the ultimate decision to the company.

Four serious regulators investigated my business for the same issue and took no action. Wouldn’t this count as a fact in my favour?

David Fotheringhame

In her witness statement, Kates says that there are approximately 3,500 positions within Barclays globally that carry the significant harm function, noting that essentially all front-office roles, including trading, require the bank to assess employee fitness.

Under cross-examination, Fotheringhame challenged Kates’ view that he would not be deemed fit and proper under Barclays’ guidelines, asking the global head of employee compliance if she had taken further steps to look into the facts surrounding the NYDFS order.

“Four serious regulators investigated my business for the same issue and took no action. Wouldn’t this count as a fact in my favour?” he asked Kates.

“My view would be the exact opposite; that one regulator did take action,” she responded.

Fotheringhame also asked whether Kates could take a view on his suitability for more than 3,500 roles, when the regulator specifically asks for a job description to be available when considering applicants.

Kates answered that while hiring decisions ultimately rest with managers, she thought it would be extremely hard for any decision-maker to give a role to someone whose fitness had been questioned by a regulatory sanction.

The tribunal judgement

The outcome of the original employment fight was overwhelmingly positive for Fotheringhame, but one point in the judgement continued to resurface at the remedy hearing. This was allegation seven, which formed the basis of his dismissal, which said he had failed to implement appropriate systems and controls around last look.

During Barclays’ original investigation into Fotheringhame’s conduct, one key issue was the control of last look settings for clients. The bank applied last look to all electronic trades, including API and ECNs, as well as a handful of GUI users.

The aim was to protect against toxic clients, who would prove to be consistent loss-makers to trade with. At a March 2016 disciplinary hearing, Fotheringhame said only about 50 out of around 3,000 clients had individual settings, while other clients were divided into standard bands.

After analysing data, the bank’s investigation showed that between March and October 2012, 429 changes were made to last look settings, affecting 535 clients on the bank’s Barx system, averaging 22 to 23 changes a week.

Previously, Fotheringhame said there were only two or three changes a week. The tribunal decided it was clear he had made significant efforts to put appropriate controls in place, but it singled out a lack of follow-through.

“While the claimant had introduced numerous last look policies, it did not appear that the claimant ensured that these were being followed without exception,” the March tribunal judgement said.

Still, the judge rejected all seven of the allegations on which Barclays originally based its decision to dismiss Fotheringhame, and only ordered a 20% reduction of his basic and compensatory award in the case, for “less extensive failing” around controls.

“I’ve concluded that there was substantive unfairness in [Barclays’] decision on each one of the allegations. I decided that, even taking all the allegations together, the [bank’s] decision to dismiss the claimant was outside the range of reasonable responses,” the judge ruled. “The respondent dismissed the claimant unfairly.”

The future

Both Kates and CTO Jain referenced the issue of systems and controls as a contributing factor to their assessment of Fotheringhame’s prospects for a future at Barclays. In response, he argued they were deliberately focusing on a handful of sentences in a document that runs to 323 paragraphs.

One of the roles that Fotheringhame earmarked as a suitable position is the newly created role of head of developer experience. It is a senior position, reporting to Jain and likely to require a material risk-taker designation.

In his witness statement, Jain said the position is a global one that requires the management of around 100 technologists around the globe. The person would be tasked with driving efficiency, and standardising the many Barclays technologists who work with and create software. Jain is looking for individuals with significant and recent technical experience in developing software in a modern way, possibly working for firms based in Silicon Valley.

“The role for which I’m recruiting is fundamentally different from Mr Fotheringhame’s previous role in trading,” Jain said in his testimony.

I do not consider it practicable for the bank to re-employ Mr Fotheringhame in the role of head of developer experience, which, in my view, is not comparable

Sameer Jain, Barclays

He also said the expected compensation for the role is only half of what Fotheringhame had previously earned and the role is not comparable. Jain acknowledged that Fotheringhame seemed competent and knowledgeable in his previous role, but his skillset is not appropriate for the one he decided not to interview him for. Under cross-examination and in his witness statement, Jain added that he would be potentially more comfortable with Fotheringhame being in a role that did not have framework-setting and oversight responsibilities.

Fotheringhame challenged Jain about oversight at the bank. He asked if other employees reporting to Jain have been let go for failings similar to his own, and went on to point to an incident during which, according to Fotheringhame, the bank accidentally released confidential client information during a code update.

Jain said he does not recall the incident, despite Fotheringhame saying it took months to “sort out the mess”, and he declined to say if anyone was fired.

Jain insisted that after having reviewed Fotheringhame’s CV, the NYDFS notice and a section of the tribunal judgement, and also consulting with HR, legal and compliance departments at the bank, he thought the role was not for Fotheringhame.

“In summary, I do not consider it practicable for the bank to re-employ Mr Fotheringhame in the role of head of developer experience, which, in my view, is not comparable to the role of head of automated flow trading,” Jain’s witness statement said.

Unusual decision

Fotheringhame is representing himself, with his wife by his side. His decision to ask for his job back contrasts strongly with the paths of others who have been in a similar position.

Foreign exchange professionals let go in the immediate aftermath of the 2013 benchmark scandal have since fought back and the majority have won their tribunal cases. None of these people have asked for or gained their jobs back.

But Fotheringhame is fighting on, even when it is at times clear that he is frustrated with the battle. 

Neither Barclays nor Fotheringhame commented for this article. 

Last day of hearing

On July 20, the last day of the remedy hearing, Fotheringhame was cross-examined by Barclays’ legal team on his witness statement. One key area of questioning focused on whether trust between himself and the bank had irretrievably broken down.

Barclays argued at a hearing in May that it would resist Fotheringhame’s re-employment, partly on the grounds that he allegedly continued to criticise the bank, which he had lost trust and confidence in.

Fotheringhame disputed this assertion. He said that while he never had confidence in Barclays’ legal team or the external legal team conducting the investigations into last look conduct, he never had a professional relationship with these teams and therefore his feelings towards them are not relevant.

“I do not hold irrational grudges. I understand the job of the lawyers was to attack my character and conduct. I understand and respect the principles of our adversarial legal system. Colleagues in the past have described me as ‘hyperrational’ – this is a fair comment and a badge I wear with pride,” he said in his witness statement.

I do not hold irrational grudges. I understand the job of the lawyers was to attack my character and conduct. I understand and respect the principles of our adversarial legal system

David Fotheringhame

Fotheringhame said he recently opened a bank account with Barclays as well, after setting up a consultancy through a firm that passed his details to the bank, which, in turn, approached him about opening an account.

“I didn’t seek it out, but I certainly didn’t reject their service on ‘principle’ and am now a customer of Barclays,” he said.

Under cross-examination, a lot of the questions focused on the precise wording used by Fotheringhame in his previous communications with the bank since the disciplinary process started. The two sides traded blows with dictionary definitions of the word ‘rogue’ and explored in some detail whether Fotheringhame considered himself a fall guy for Barclays.

“Do you or do you not think that you were sold down the river?” was a question put to Fotheringhame repeatedly.

“I’m not going to be pressured into a one-line answer when the truth is much more nuanced,” he responded, after answering the question several times by saying that pressure on the bank and its employees following the DFS order was immense.

“I believe the DFS order created such a strong current that no-one in the firm was going to swim against it,” he added.