Employment scapegoating

When industry regulators investigate wrong-doing by companies, it is both common and convenient for the company to attempt to deflect attention away from the directing minds of the company and point the finger only at those who have been caught perpetrating the offences. In order to limit the damage, the company will often offer up the heads of those, but not their seniors who are often complicit in the wrong-doing, and in a number of well-publicised cases, actively participated in it too.

The recent news that Rohan Ramchandani, an foreign exchange trader formerly of Citibank (London) who had been dismissed from the bank in 2014, just before the bank settled with the FCA in the UK, and the SEC, the Federal Reserve Bank, the Commodity Futures Trading Commission, and the Comptroller of the Currency in the US, for market manipulation of various FX benchmarks, was suing the bank for $112m might seem a misguided course of action from an employee who had limited prospects of success in the suit.  Until, that is, that the facts of the matter are examined more closely.

Mr Ramchandani, along with 7 other FX traders from the bank, were dismissed within months of the settlements, purportedly, for breaches of client confidentiality relating to up to 4-year old electronic communications. The timing and number of those dismissed was, indeed, dismissed by the bank as merely a “coincidence” which had nothing to do with the fact or timing of Citibank’s settlements. A number of those brought claims of unfair dismissal against the bank, and in subsequent Employment Tribunal Hearings, were largely successful. A common feature of all their defences was that breach of client confidentiality was commonplace amongst their managers who actively encouraged it to give the bank an edge in their trading. And that they had been dismissed while their managers were not, and so effectively, they had been scapegoated.

Mr Ramchandani was even more unlucky than those who were merely dismissed. Although the UK Serious Fraud Office (SFO) abandoned its own criminal investigation into currency rigging allegations in 2016, saying it lacked sufficient evidence for a successful prosecution, the SEC brought anti-trust charges against him, along with a number of traders from other banks in London. After trial in the US, Mr Ramchandani was found not guilty. Had he been found guilty, he faced up to 10 years in prison. Although it is hard to feel sorry for an employee who was earning sums vastly in excess of the average wage, the stress he must have endured in those years at the prospect of losing his liberty must have been almost unbearable.

He has now brought claims against Citibank, claiming effectively that it hung him out to dry in an effort to limit the fallout from the matter and avoid more senior managers being implicated. The suit alleges that by limiting the basis for its own guilty plea just to Mr Ramchandani’s activities, the bank additionally avoided class-action lawsuits and protected its ability to participate in crucial US markets.

“My client seeks to demonstrate that Citi maliciously and deliberately constructed a meritless case against him,” said David Lurie, Mr Ramchandani’s Brooklyn-based attorney. A separate UK employment tribunal hearing is due later this year, which is likely to shine a light on the bank’s efforts to discredit him. His defence at that Hearing, which will be reported in the press, is likely to keep a number of Citibank HR employees and senior management awake at night.

 

Meaby & Co are lawyers experienced in all aspects of regulatory and employment issues. Should you require advice on any aspect of employment law, including the above, please contact Chris Marshall on 0207 703 5034.