UK: FSA Sanctions In Team Move Cases

Last Updated: 6 June 2012
Article by Christopher Fisher, Angela Hayes and Elizabeth Hodgkinson

Originally published May 31, 2012

Keywords: FSA, sanctions, interdealer brokers, civil ruling

In Spring 2010, we published an Update on the "Tullett Prebon Plc v BGC Brokers LP" case. In this much-publicised and long-running battle between rival interdealer brokers, the High Court took a dim view of BGC's conduct when poaching a team of brokers from Tullett. It took an even dimmer view of the conduct of Anthony Verrier, the former COO of Tullett.

Having thought that this dispute had long drawn to a close, the FSA has brought it to the forefront again by taking the unusual step of banning Mr Verrier from ever again working in a regulated activity in the financial services industry. In this alert, we shall consider why the FSA thought it appropriate to come to such a decision following a civil ruling, and also consider how the FSA's reaction could have an impact on team move cases in the future.

The facts

In 2008, Mr Verrier resigned from Tullett and went to work as the "number two" at BGC. Shortly after joining, Mr Verrier embarked upon a campaign to recruit brokers from Tullett, concocting a false constructive dismissal argument in an attempt to release the team from their contracts. When nine brokers resigned on instruction from Mr Verrier, Tullett commenced proceedings against BGC and the individual brokers, claiming, amongst other things, conspiracy and inducing breach of contract and seeking injunctive relief.

In the High Court in March 2010, Mr Justice Jack gave a damning judgment against BGC. Notably, he found that Mr Verrier had, when giving evidence, "stuck to the truth where he was able to, but departed from it with equanimity and adroitness where the truth was inconvenient". He also made short shrift of Mr Verrier's evidence that he had "a history of frequently losing BlackBerrys", finding that it was inconceivable that eight BlackBerrys could go missing in 12 months; instead, he had deliberately mislaid some of the 'phones when he was concerned they might contain "inconvenient material".

The Court of Appeal upheld the High Court's findings and, in April 2011, a private settlement was reached for an undisclosed sum.

The FSA's reaction

On 16 May 2012 the FSA published a decision notice indicating that it has decided to prohibit Mr Verrier from performing any function in relation to any regulated activity in the financial services industry. The FSA based its decision not on its own investigation, but on the High Court's findings. The FSA's view is that the court ruling confirmed that Mr Verrier is not a fit and proper person due to concerns over his honesty, integrity and reputation.

This marks only the second time in the FSA's history that it has used the outcome of a previous court case as the basis for a ban on an individual. It is the first time that the FSA has taken action over a team move case. As a result, it has no doubt come as quite a shock to Mr Verrier.

It should be noted, however, that Mr Verrier is contesting the ruling and it has been referred to the Upper Tribunal. Mr Verrier claims that the decision is a "significant extension" of the FSA's reach and was done without considering his explanation. The Tribunal may uphold, vary or cancel the FSA's decision.


The FSA's Final Notice quotes numerous findings of fact from the High Court judgment that were unfavourable to Mr Verrier and which have formed the basis of the FSA's findings. Most of these relate to the extent to which Mr Verrier had lied and had encouraged others to do so. On any view, such findings of fact are relevant to the FSA's "fit and proper" test as indicating that Mr Verrier's honesty and integrity fell short of the standard expected by the regulator. However, in its overall Summary of Reasons two main quotes are relied upon: both "his adroitness where the truth was inconvenient" (i.e. he had lied to the court) but also:

"Mr Verrier was found to have participated in an unlawful means conspiracy, the unlawful means including the inducement of the broker defendants to breach their contracts of employment with Tullett by leaving early without lawful justification".

The references to "unlawful" and "lawful" in this quote are references to the civil law: the breaching of the employment contracts by the employees and the civil tort of conspiracy to induce that breach. Unfortunately, we are left with no clarity over the FSA's likely stance to orchestrated team moves where, though behaviour may be clandestine, no deliberate lies are told to anyone. There is also no guarantee that any decision of the Upper Tribunal on the appeal will provide more clarity on this. It would indeed be a "significant extension" of the FSA's reach if it considers that its role as policeman of "proper" behaviour extends to breaches of contract in general business disputes involving FSA regulated entities.

The FSA's ban of Mr Verrier will no doubt make employees and teams in FSA regulated entities exercise much greater caution and care in the way they behave in a potential team move situation.


Mr Verrier's behaviour as disclosed in the High Court's judgment was at the particularly egregious end of the kinds of behaviour we see in team moves. Our view is that it was the exceptional circumstances of Mr Verrier both lying under oath and constructing a false constructive dismissal argument that led the FSA to take the steps it did. We doubt that the FSA would seek to ban or fine individuals just for being involved in a team move that came about without deliberate lies being told to the employer as this would not be sufficient to call their honesty and integrity into question. Indeed, it may not even be sufficient for an individual to lie to their employer; it may have been the lying in court and the elaborate constructive dismissal argument that were the distinguishing factors in Mr Verrier's case.

We do believe, however, that the FSA's decision is illustrative of their hardening stance against wrongdoing in the City. The decision could provide a new weapon in the armoury of employers looking to defend against team defections. Alerting the FSA to an employee's conduct in orchestrating a team move is no doubt something that regulated employers will be considering with increased frequency and the potential sanctions are quite possibly a greater deterrent than threats of damages or injunctions. Nevertheless, this should, of course, only be considered in particularly serious cases and with the benefit of legal advice.

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Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2012. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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