SocGen Sued by Ex-Banker It Accused of Cheating on FX Trade

  • Bank says ex-trader Botbol dismissed for 3 cases of misconduct
  • SocGen says Botbol bragged to BNP, Morgan Stanley bankers

Societe Generale SA fired a currency trader for allegedly cheating a client after the bank said it discovered the incident during an internal investigation into the global foreign-exchange manipulation scandal. Now, the former employee is suing for unfair dismissal.

Societe Generale dismissed Ilan Botbol in 2015 for three instances of misconduct, including cashing in an excessive margin from a customer and bragging about it to traders at BNP Paribas SA and Morgan Stanley in 2008, the French bank’s lawyer Arnaud Chaulet told the Paris employment tribunal on Monday.

“I’m in the middle of stuffing a client,” Botbol said in a chat room, according to a transcript read by Chaulet. The former Societe Generale trader later said in the chat that he’d made 500,000 euros ($530,000) from the trade and agreed with the BNP trader’s comment that he was “a crook,” Chaulet said.

Botbol’s lawyer Nicole Bensoussan said that while the margin was important, Societe Generale has failed to prove it was excessive. Botbol “never” cheated customers, she said, adding that she found it odd that Societe Generale would blame her client for generating income for the bank.

Other global banks including Barclays Plc, JPMorgan Chase & Co. and UBS Group AG, have paid about $10 billion to resolve regulatory probes related to allegations currency trader rigged rates to increase profits on trades.

The Splits

While Societe Generale hasn’t been fined in relation to the FX scandal or accused of wrongdoing by regulators, the French lender was added in 2015 to a U.S. suit by investors claiming banks manipulated the foreign-exchange market. Societe Generale, in its own American court filings, rejected allegations that it participated in any conspiracy related to FX rates.

Societe Generale, Morgan Stanley and BNP representatives declined to comment on the case. The Paris employment tribunal case didn’t allege the BNP or Morgan Stanley traders acted improperly.

Botbol told a Morgan Stanley trader he used a technique called “the splits” that made him feel uncomfortable “because it isn’t MIFID,” in reference to European financial market regulations, Chaulet said. Botbol also allegedly told the other trader in a chat that he could always pretend he made a typo mistake if the client realized there was a problem.

Bensoussan said her client had always been seen as a model employee by Societe Generale right up until he was fired for remarks made in chats that gave a bad image of the bank. “How can they say the rules were breached when there were none?” she asked in reference to guidelines for conduct in chatroom discussions.

2015 Dismissal

Bensoussan told the Paris court that the case is undermined by the bank’s failure to monitor employee behavior in good time and to act within two months of learning of the alleged infringements. Botbol was quizzed by lawyers in May and June 2014, and was dismissed in early 2015. Bensoussan added that the chatroom transcripts never should have been stored so long and their use by Societe Generale invades Botbol’s privacy.

Bankers routinely turn to specialist labor courts throughout Europe to recoup lost bonuses and rehabilitate tarnished reputations, with varying degrees of success. Baris Ozkaptan who claimed Citigroup Inc. turned a “blind eye” to sharing confidential client information before the 2013 currency market manipulation scandal, recently became the fourth FX trader at the bank to win his employment lawsuit in the U.K. Ozkaptan’s final award hasn’t been detailed, but the ruling said he contributed to his own demise and any payment will be reduced.

In the Paris case, which was filed in 2015, Judge Thierry Delmotte said a ruling would be announced March 21.

Integrity Rules

Societe Generale also accused Botbol of sharing information about a client order in a chat with a Morgan Stanley trader in 2009 and saying “if you want to have fun and short it, go for it,” according to Chaulet. When the Morgan Stanley trader refused to trade on the information, Botbol replied in the chat “up to you, but it wouldn’t have cost you much.”

“What’s at stake here is a violation of the rules that ensure integrity on the markets,” Chaulet said.

Bensoussan said Societe Generale encouraged traders to gain market intelligence by sharing information with traders at other banks. Botbol’s lawyer said no confidential information was shared, pointing out that the client was only identified as an Asian operator. Bensoussan also said the transcript shows Botbol didn’t give accurate figures. He said the order was worth $200 million or A$200 million, when in fact it was worth about 30 percent less, she said.

Societe Generale also argued that Botbol was let go because he didn’t act in a client’s best interest in 2011 by delaying executing an order, even as the price rose. “I used my bollocks,” the former trader was quoted as having said in a chat with a BNP trader. He said he wasn’t proud when the BNP counterpart told him he’d probably “done something stupid.” Botbol’s lawyer said the accusation is unsubstantiated as nothing in the file specifies what it means to delay executing an order.

In her final argument, Bensoussan said that Botbol handled 30,000 buy or sell orders a year to underscore that if the bank only found three instances that means “Societe Generale went through absolutely everything and found nothing.”

— With assistance by Suzi Ring, and Fabio Benedetti Valentini

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