The Story of London’s Latest Broker War
The Story of London’s Latest Broker War
(Bloomberg) --
A new battle of the brokers is in court. BGC Partners Inc. and its rival Tradition are fighting over the “debacle” of the poaching of a six-person team with tales of surveillance by private security agents, deleted WhatsApp messages and threats to put a broker in jail.
The 20-day trial kicked off Monday, with BGC declaring that not only did Tradition’s senior U.K. executive orchestrate the move of the brokers on BGC’s flagship currency-trading desk in April 2017, but he also received confidential information from a “tightly guarded” spreadsheet. Tradition, the London arm of Cie Financiere Tradition SA, said the entire lawsuit has an “Alice in Wonderland feel to it,” saying that most companies would want to recruit “star brokers.”
The case has echoes of another high-profile and bitter dispute over recruitment within the small and ultra-competitive market: that of BGC and inter-dealer broker Tullett Prebon Plc that led to at least 10 lawsuits. In 2015, BGC agreed to pay $100 million to its competitor to resolve claims it poached traders.
At the center of the latest case is Michael Anderson, who became joint chief executive officer of Tradition’s London operations in October 2016 with a mandate to expand. BGC says that he pushed to get secret information about its revenue figures from a manager at Tradition. Tradition’s lawyer said Anderson had no idea that his subordinate, Anthony Vowell, had gained access to the critical sales numbers, and that BGC was simply worried about Tradition’s increasing competitiveness.
“They wanted to cut Tradition back down to size. They wanted to take Anderson out,” Tradition attorney Neil Kitchener said of BGC. “If this litigation is about getting anything, it is about getting Anderson.”
Just days before the trial started, Tradition said it learned that its rival had used “private security agents” to follow Vowell. In addition, BGC had put one of its own brokers under surveillance, Tradition said.
Spokesmen for BGC and Tradition declined to comment.
The poaching of the team by Tradition was a “debacle,” Anthony Warner, who leads BGC’s brokerage business in London, said.
BGC’s main claim is that Anderson oversaw the poaching of six of the eight brokers from the Forward Cable desk, which brokered transactions in dollars and pounds, and then tried to hide evidence of his role. A series of meetings took place over the winter of 2016 as the executive and a recruiter coordinated the move, BGC said. On the day that the brokers resigned from BGC, Anderson wrote to the headhunter: “I am deleting all my whatsapps.”
Deleted Messages
Anderson says he deleted the messages “because otherwise the apps become overwhelming and unmanageable,” a claim BGC’s attorney Max Mallin called “utterly implausible.” He said: “It is obvious that Mr. Anderson deliberately destroyed evidence -- clearly he knew Tradition needed to hide wrongdoing.”
BGC is seeking as much as $20 million from Tradition. The desk “has never fully recovered” from the move, “and the losses are ongoing,” Mallin said. The firm seeks a further $15 million in damages from the loss of its data on revenue generated by 55 different brokers, he said.
The Forward Cable Desk was co-headed by Paul Bell, who according to BGC, acted as a “recruiting sergeant” for the rest of the team. All the brokers resigned April 3, 2017, the day their boss, Rob Kitchin, returned from holiday. Bell, “a loud and self-confident man, who acted as a spokesman for the desk,” was paid 1 million pounds ($1.29 million) by Tradition as a signing bonus. The money “can only be explained as a Pied Piper fee,” Mallin said.
Tradition said BGC was unwilling to match any of the offers it made to the brokers and that Bell played no role in recruiting his team. Bell wasn’t valued by BGC, a firm that had “a notoriously poor reputation in the market,” his lawyer, David Craig, said.
Bell wrote in an internal note to himself that BGC was “great at buying staff, useless at holding staff.”
Kitchin, who ran the British broker unit after it was taken over by BGC, said in his evidence that the team displayed no animosity toward him or the firm.
Still, for Tradition to come after its brokers, was a “gamechanger,” Kitchin said.
BGC alleges that broker poaching wasn’t Tradition’s only aggressive move.
It says its rival got sensitive information after one of BGC’s own brokers, Simon Cuddihy, on multiple occasions shared confidential data with Vowell, a close friend and former colleague who worked at Tradition.
BGC said Cuddihy boasted to people at a party that he had access to all of BGC’s revenue numbers. Cuddihy provided specific information to Vowell when he requested it, BGC said in its filings.
In one WhatsApp message, Cuddihy said: “Obv don’t tell ppl...cos they would sack me...If got back.” The internal records went beyond being of any obvious professional use to Vowell, BGC said.
Tradition says that Cuddihy, who remains a BGC employee, was pressured to implicate Anderson in the data leak. BGC “is trying to put me in jail,” Cuddihy said in one message cited by Tradition. The broker is set to testify later in the trial.
To contact the reporter on this story: Jonathan Browning in London at jbrowning9@bloomberg.net
To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Keith Campbell
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