By Andrew Knorpel on 10 March 2016
In the recent case of Stimpson v Citibank N.A, an employment tribunal held that a bank wrongly and unfairly dismissed a foreign exchange (FX) trader for sharing information via Bloomberg instant messaging and disclosure of confidential client information to traders from other banks in an online chat room.
Under the bank’s disciplinary policy, unauthorised disclosure of confidential information was included as a specific example of gross misconduct, and the trader was summarily dismissed following a disciplinary investigation into such disclosures.
This employment claim formed part of a wider landscape in the financial sector. In late 2013, financial regulators in the UK, US and other countries began to investigate concerns that traders at a number of financial institutions had behaved in a manner that was inappropriate in FX trading. An investigation by the Financial Conduct Authority (FCA) eventually led to substantial fines being imposed on a number of banks, including the respondent in this case, for failing to control business practices in their FX trading operations which it identified as systemic failures by the bank.
Despite the widely publicised background of this employment case, the tribunal found that it was insufficient for the bank to simply rely on the black letter of its policies and codes of practice on protecting confidential information. The bank should have additionally investigated how the policies were applied in the FX business or the extent to which the information was already in the public domain.
It was held that a reasonable investigation would have revealed that there was a culture of, and in fact management appeared to condone, information-sharing between FX traders at different banks, a fact that was highlighted by the regulatory investigation into the bank by the FCA. The tribunal considered contributory fault but found that the employee had not been given specific guidance for using the on-line platform and any breach of confidentiality was not deliberate as the employee believed his conduct was permitted, given the similar conduct of his peers and immediate managers.
Summary: The case provides a useful lesson for employers conducting disciplinary investigations and hearings for misconduct. It is a reminder that whilst it is critical to have a policy, sole reliance on the black and white analysis of policy will be insufficient if employers do not ensure that they are actually applied and enforced in the business. Of course, one way to ensure application within the business is by providing managers and staff with relevant training on the practical aspects of relevant policies.