Former CEO Lederman Sues LSE’s Turquoise for Unfair Dismissal

Former Turquoise Chief Executive Officer Eli Lederman, who exited the alternative trading system after its purchase by London Stock Exchange Group Plc (LSE), is suing for unfair dismissal, saying restrictions he faced after leaving were “unwarranted.”

Lederman, 47, said the constraints were a “deliberate” and “egregious usurpation of rights” and LSE has failed to turn over all the documents he has sought. A London Employment Tribunal is scheduled to begin hearing the case on March 17, the court said.

“Serious questions still remain about the LSE Group’s compliance with its legal obligations to disclose relevant evidence in its possession,” he said in an e-mail yesterday. “To date, no e-mails related to my dismissal have been disclosed from Xavier Rolet or between LSE Group and any bank shareholder.”

The exchange, led by CEO Rolet, completed its purchase of Turquoise in February 2010 to compete with so-called multilateral trading facilities that are backed by banks and brokers. The trading system merged with LSE’s Baikal unit, a dark pool that doesn’t display prices.

LSE replaced Lederman with David Lester, the director of information Services at the exchange. Jonathan Blostone, a spokesman for London-based LSE, declined to comment when contacted yesterday. John Wilson, CEO of Baikal, left along with Lederman at the time the acquisition was completed, joining spread-betting firm ETX Capital.

‘Entirely Justified’

Lederman, a former managing director at Morgan Stanley in London, said in the e-mail that he decided to sue “when it became clear that other members of the Turquoise team were also pursuing claims against the LSE Group that I considered entirely justified.”

The maximum award for unfair dismissal in England for a claim filed before February of this year is 76,700 pounds ($124,000), said David von Hagen, an employment lawyer at Winckworth Sherwood LLP in London.

“I’ve known banks that’ll say: ‘that doesn’t scare us, do your worst,’” he said. “What’s much more scary is what can be disclosed in terms of evidence.”

Turquoise was set up by LSE’s biggest customers including Morgan Stanley (MS), Credit Suisse Group AG (CSGN), Bank of America Corp., Deutsche Bank AG (DBK) and Goldman Sachs Group Inc., and had taken market share from LSE and other traditional exchanges.

TMX Purchase

LSE last month agreed to buy TMX Group Inc., owner of the Toronto Stock Exchange, for about $3.2 billion in stock. Ontario Finance Minister Dwight Duncan has called the Toronto exchange a “strategic asset” and has questioned the impact of the deal on the province and country.

Lederman’s action comes as exchanges, alternative trading systems such as Bats Europe and Chi-X Europe Ltd., European Union regulators and clearinghouses prepare to gather next week at the World Exchange Congress to debate the issues confronting the industry as consolidation gathers pace.

Speakers include Alasdair Haynes, CEO of Chi-X Europe, the region’s largest alternative trading system, and Lester, who now runs Turquoise.

To contact the reporters on this story: Nandini Sukumar in London at; Lindsay Fortado in London at

To contact the editor responsible for this story: Andrew Rummer at

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