Ex-JPMorgan Trader Wins U.K. Employment Fight Over Spoofing

A fired JPMorgan Chase & Co. trader won his legal fight with the U.S. investment bank after a London court rejected claims he’d engaged in market spoofing and said the company had targeted the man to “appease its regulators.”

Bradley Jones, a former cash equities trader, was unfairly dismissed, Judge Stephen Knight said in a ruling published Wednesday. Jones had argued that he was only fired because the bank wanted to show it was taking a tougher line on a spoofing scandal that cost it close to $1 billion in penalties.

JPMorgan “changed its approach to the 2016 Sell Orders because of its desire to appease its regulators by showing it was “cleaning up its act,” the judge said, referring to the trading.

The ruling is a blow for JPMorgan, which adopted a hard-line approach to spoofing allegations after accepting that market manipulation was rife at two trading desks in the U.S. Jones argued he was wrongfully fired after the bank revisited a compliance review that had previously found he did nothing wrong. His colleagues, he said, staged a walkout after his dismissal last year.

“I am delighted with the winning tribunal judgment which says not only that I was unfairly dismissed but also completely clears me of having done anything wrong at all,” Jones said in a statement through his lawyers.

A JPMorgan spokesman declined to comment.

Precious Metals

JPMorgan has attempted to move on from the regulatory penalties after agreeing to pay more than $920 million to resolve U.S. claims that desks were spoofing markets in precious metals and treasuries. It faces a separate legal claim in the U.S. from Donald Turnbull, the former head of the bank’s precious metals trading desk, who said he was fired for cooperating with the Justice Department probe.

Spoofing occurs when a trader enters buy or sell orders and then cancels them before they are executed, creating a false market indicator that can generate profit by taking the opposite position.

The former trader wants to be formally re-hired by JPMorgan, allowing Jones to reclaim his lost salary, which would likely be more than any tribunal award. Under U.K. law, most employment awards are capped at slightly more than 80,000 pounds ($110,000) unless there is evidence of discrimination or retaliation.

Jones’ initial trading of a Swiss stock one afternoon in January 2016 triggered a surveillance alert after he placed two sell orders and then canceled them shortly afterward. While submitting and canceling orders isn’t illegal, it is unlawful as part of a strategy intended to dupe other traders and create a false impression of demand. The false impression is what gives the practice the moniker of spoofing.

Insignificant Trade

Jones wouldn’t “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,” the judge said in his ruling.

The case echoes that of a Citigroup Inc. former trader who was dismissed over similar allegations even after the U.K. financial regulator cleared him of misconduct and highlights the difficulties facing banks attempting to second-guess regulators in market-abuse cases.

JPMorgan had argued that Jones was the only person who could explain his motives and that it couldn’t accept a simple denial of spoofing.

The judge disagreed, saying that the bank had reversed the burden of proof by putting the onus on the trader to come up with a convincing explanation. To do so “retrospectively,” he said, was unfair and only made harder by the passage of time.

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