In a case that highlights the legal risks involved in poaching staff from rivals in a concerted fashion, one bonds dealer was yesterday found guilty of unlawful conspiracy for raiding the workforce of another.
Tullett Prebon, the world’s second largest bond dealer, which last week said it was involved in takeover talks with an unspecified bidder, won its argument against BGC Partners in a High Court trial that started last October.
The company was unhappy with the way that 10 of its “crown jewels” or brokers had been recruited and sought cash compensation and a court order prohibiting BGC from poaching further staff. Damages and the possibility of appeal will be determined at a later hearing.
Tullett is also suing BGC in New Jersey in the US for alleged racketeering. It is seeking $1 billion in damages for hiring 164 of its brokers in Hong Kong, Singapore, Tokyo, London and the US.
Lawyers told the Reuters news agency that the case stood out in a field where poaching was commonplace due to the scale of the raid and the egregious circumstances surrounding it. These circumstances included the animosity between Tullett’s chief executive Terry Smith and its former global chief operating officer Anthony Verrier, now working for BGC.
Peter Frost, global head of employment at law firm Herbert Smith, said: “It won’t stop poaching, but it provides a reminder that those doing the recruiting have legal risks.”
A key plank of the case related to forward contracts and sign-on payments of a reported £40 million that were used as inducements for staff to move. Tullett also attested that it was the victim of an early exit strategy coordinated by BGC president Shaun Lynn and Verrier.
The strategy encouraged a number of brokers to claim constructive dismissal for a variety of reasons to get out of their Tullett contracts before time. Justice Raymond Jack ruled that the constructive dismissal claims were not valid, however.
James Lisbon, a partner with law firm Mishcon de Reya, told Reuters: “The court ruled that it is not OK to be an insider of a company and organise a concerted run on its employees. This is so far beyond the line that the courts are more than happy to uphold restrictive clauses in contracts.”
He added that the case also demonstrated that the courts were moving towards upholding employment contracts more stringently.
