Former RBC FX trader suing bank for £13 million

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By:
Farah Khalique
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A senior currency trader fired from Royal Bank of Canada is taking the bank to task at an unfair dismissal hearing that includes accusations of sloppy trading, alleged bribery and an 'incoherent and inconsistent' global FX policy that he claims no one had bothered to read.

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John Banerjee was headhunted to work at Royal Bank of Canada (RBC) as an emerging markets trader at director level in June 2015. Just over a year later he was dismissed. He claims this is because he blew the whistle on a number of failings at the bank – which put senior managers’ noses out of joint – and is now suing the bank for £13 million.

Banerjee describes in his witness statement a firm with “no effective systems and controls, particularly in compliance” and that important issues were “swept under the carpet”.

He says: “I can say that my time at RBC was extraordinary and never in my career had I experienced such a divergence between policy on the one hand and practice on the other.”

A bank spokesperson said: “We believe this claim to be without merit and are vigorously defending our position.”

Box-ticking culture

Shortly after hiring Banerjee, who has been a trader for more than 20 years, RBC put together a global FX sales and trading policy for all FX employees to sign up to. Following the currency rigging investigation that resulted in billion-dollar fines, investment banks came under pressure to instill codes of conduct to keep traders in check.

But when Banerjee studied the fine print of RBC’s FX policy some of it struck him as: “Either inconsistent, unclear, problematic and in places impossible to comply with.”

He raised concerns with senior managers in late October that the policy appeared to forbid trading ahead of a known fixing order but simultaneously allowed trading activity as part of normal risk management or a hedging strategy. The stated penalties for non-compliance were severe, ranging from regulatory fines to civil and criminal liability.

Banerjee said he carried out a straw poll to find out what his colleagues in foreign exchange sales and trading thought of the policy and claims he discovered that no one in London or Hong Kong had read it. He recalled that one of the hyperlinks in the electronic version on personal accounting dealing was broken. Curiously, no one had raised this with compliance and yet virtually all staff had signed up, including Sian Hurrell, European head of fixed income, currencies and commodities.

Banerjee says in his witness statement: “Ms Hurrell remarked (with a blush) that she spent less than three minutes on her own Annual Attestation: ‘Most of that time trying to log-in’.

“More than one person said it was just like an Apple IOS phone upgrade – you could either ‘accept’, in which case you would keep your phone as a phone, or you could ‘reject’, in which case your phone would be unusable.”

A bank spokesperson says: “We have controls in place to uphold principles, policies and procedures. We conduct ongoing thorough reviews of these processes to protect the integrity of our business and retain the trust of our clients.”

Banerjee says he faced backlash from senior managers who were reluctant to listen to his concerns and in November his slated £100,000 bonus was slashed in half despite his success as a trader. His probationary period was also extended by another three months, he says.

Don’t ask, don’t tell

The following month, Banerjee alleges that RBC lost $880,000 when fellow trader Paul Green did not cut short one of Banerjee’s trading positions in the South African rand, missing Banerjee’s call level and stop-loss order on the trade. Green did not respond to a LinkedIn message and could not otherwise be contacted by Euromoney.

Banerjee says the bank was slow to investigate Green, who was working alone on the Hong Kong desk when Asian markets opened, despite this having been previously identified as an operational risk.

When he pressed the matter in the New Year, Banerjee claims that the global head of FX, Ed Monaghan, shouted at him in a meeting that: “An investigation will make the department look bad and that means you will look bad,” and then offered him a bribe: “Is it the loss that bothers you? I’ll cut you a cheque for the loss – just drop it.”

Monaghan denied in court that he offered a bribe. He said: “However, I did not, of course, mean I would physically give Mr Banerjee a cheque or any other type of payment representing the losses. I simply meant that I could (if I wanted) notionally transfer the losses from his trading book.”

A bank spokesperson says: “We deny any suggestion of bribery or attempts to cover up any operational failing or employee misconduct. It would be inappropriate to comment further whilst the proceedings are ongoing.”

In an email dated April 11, 2016, Banerjee alerted the bank’s global head of fixed income, currencies and commodities, Jonathan Hunter, of his growing concerns following a town hall meeting in which employees were advised that: “Don’t ask, don’t tell’ is not tolerated”, and were encouraged to challenge the status quo.

He was subsequently invited to attend a meeting with RBC’s UK head of internal audit, Adrian Palmer, who was appointed to investigate Banerjee’s concerns, including why staff working exclusively in foreign exchange were ordered to sign up to rules about dealing in US securities.

Bye bye Banerjee

Banerjee says his boss, Paul Adamson, advised him on how best to proceed at the meeting, but warned: “Don’t forget Joe Pesci assumed he was going to be made up.” Actor Joe Pesci plays a mobster in crime film ‘Goodfellas’ who thinks he is going to a meeting to be promoted by Mafia chiefs, but when he arrives, they shoot him dead.

It later transpired that Banerjee’s initial email to Hunter was forwarded by Monaghan, who had been cc’d, to the bank’s head of employee relations, Urmilla Devitt, a move that Banerjee described at the hearing as “sinister”. Following a grievance hearing, Banerjee was dismissed on August 18, 2016. His bosses Adamson and Monaghan have since also left the bank.

RBC dismissed Banerjee because of persistent lateness, insists its lawyer, Jane Mulcahy QC. Monaghan says in his witness statement that he was shocked to hear from one of his colleagues in Toronto that: “Mr Banerjee had to be woken up in the ‘middle of the afternoon’ because he had not turned up for work,” – a claim that Banerjee strongly rejects.

Monaghan also says Banerjee had demonstrated a lack of respect for his colleagues, in particular junior colleagues, a claim that Banerjee also refutes. Charity Whistleblowers UK is helping Banerjee with his case. The tribunal hearing is scheduled to finish in mid-May.