A former JPMorgan trader was unfairly dismissed after the US bank reactivated an internal probe into a spoofing allegation, a London employment tribunal has ruled.
Bradley Jones, who was employed as a cash equities trader in London, won an employment tribunal lawsuit against the US investment bank after a judge concluded that the bank changed its approach to a series of trades he made in January 2016 “because of its desire to appease its regulators by showing it was ‘cleaning up its act’.”
Jones was investigated by JPMorgan in 2016 over a series of trades that saw him enter and delete two sell orders in quick succession. The bank’s surveillance systems had identified the trades as potential market abuse.
However, at the time, the bank took no further action against him, concluding that Jones had not engaged in misconduct and that his pattern of trading as a whole meant that spoofing could be ruled out. Spoofing involves quickly placing and withdrawing buy and sell orders to give other traders a false impression of demand. It was made illegal in the US in 2010.
In January 2020, Jones was dismissed for alleged gross misconduct over the 2016 trades with one manager saying that the 2016 sell orders “would be treated differently today”, according to an employment tribunal ruling published on Wednesday.
Jones sued JPMorgan for unfair dismissal, alleging that the US bank had changed its approach to the 2016 sell orders following a 2019 Department of Justice investigation into the bank’s precious metals trading in the US.
In that case, JPMorgan entered into a Deferred Prosecution Agreement over actions by the precious metals desk that were said to have caused $200m of loss between March 2008 and August 2016. Since then the bank had taken “significant steps” to improve its compliance procedures, the employment ruling noted.
Jones, who earned $675,000 in 2018, is seeking reinstatement at the bank allowing him to reclaim any lost salary. A further tribunal hearing to decide on the next steps in the case is expected later this year.
In his ruling, employment tribunal judge Stephen Knight concluded that the bank “radically altered” its approach to Jones’s actions between concluding he did not deserve disciplinary action in 2016 and dismissing him four years later.
Knight concluded it was unfair to apply retrospectively a new enhanced standard on whether a trader had breached the bank’s policies to the 2016 trades. The judge concluded that on the evidence presented to the tribunal, Jones did not engage in spoofing.
“I do not accept that the claimant would risk his entire professional future for an insignificant trade, for an insignificant amount of money which would provide to him no material financial or other benefit,” Knight concluded.
JPMorgan declined to comment.