Fired JPMorgan trader claims he was made a spoofing scapegoat

Fired JPMorgan trader claims he was made a spoofing scapegoat
Phil Remillard says he was terminated to appease US regulators.
DEC 11, 2024
By  Bloomberg

by Jonathan Browning

An ex-JPMorgan Chase & Co. commodities trader sued the investment bank for unfair dismissal, alleging he was wrongly accused of spoofing cocoa trades to “appease” regulators.

Phil Remillard filed the claim at a London employment tribunal, saying JPMorgan had chosen to take a tougher approach to trading activity after the spoofing scandal at the bank. He’s suing to get his old job back — pursuing the same argument employed by Remillard’s ex-colleague Bradley Jones, who won a tribunal ruling over alleged spoofing and more than £1.6 million ($2 million) in back pay.

Remillard is accused of placing cocoa futures trades on 12 occasions in 2018, only to cancel them before they were executed. Remillard denied the allegations, saying he thought that the lender reversed the burden of proof in his disciplinary case. He said US regulators clamped down on the lender following the scandal that saw the bank pay $920 million to resolve charges of market manipulation.

JPMorgan executives say they concluded that his trading would be likely to have misled markets, according to court filings prepared for the case. Spoofing takes place when a trader places an order with the intention to cancel it before it is executed – giving a false impression of interest. 

“The impact of my dismissal has been devastating to me and extremely demoralizing,” Remillard said in his witness statement. “I am concerned that I was put through all this so that JPMorgan could say to the DOJ that it had dismissed” a trader with historic spoofing offenses.

While awards for unfair dismissal cases are capped at £105,700, at UK tribunal employees can qualify for higher awards if they are reinstated in their jobs. In Jones’ case, after winning a ruling that he had not spoofed the market he persuaded judges that he should be given his old job back, earning one of the largest ever payouts.

Remillard said in court filings he was struck by similarities with the Jones case, saying that he came to understand that some of the dismissing managers were involved in Jones’ case as well.

His disciplinary action dates back to 2021, when JPMorgan re-ran a trading surveillance operation on various transactions after becoming concerned that some trading activity hadn’t been effectively monitored. Remillard, who was by that time a precious metal’s trader, said he discovered that his trading in 2018 was flagged for review.

JPMorgan executive Jason Sippel said in a witness statement that trading summaries showed that on occasion, Remillard entered a so-called “iceberg order,” named because only part of the total order is visible to the market. 

The trader then placed a large, disclosed order in the opposite direction. JPMorgan said Remillard then completed the order only to cancel the disclosed transactions, according to Sippel.

“Some of his trading activity had the classic hallmarks of spoofing,” Sippel, a global co-head of markets at JPMorgan’s investment bank, said in a witness statement. “It is unusual to see this pattern of trading because, even if there is a legitimate reason for it, traders are generally very wary of being seen to trade in this way because of the optics.”

Remillard told Sippel that the fast-paced nature of the role meant that he was highly unlikely to be able to remember why he had made particular trading decisions. He said that he would likely have canceled orders due to changes in the market.

“He took the position that unless I could prove that I did not spoof, then I did spoof,” Remillard said. Remillard said he would typically place around 100 to 200 trades in a day.

Cocoa futures are a much smaller market than other major commodities, like oil or gold, and production is limited to a small belt of countries near the equator. That can make them prone to volatility. Prices in New York have more than doubled this year, reaching a record in April.

“I would in many ways have preferred to have been able to find a way to exonerate Phil, but the weight of evidence clearly indicated that he had been spoofing,” Sippel said. “I reached the conclusion that the only appropriate sanction for this gross misconduct was summary dismissal.”

 

Copyright Bloomberg News

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