A group of City brokers will have to pay back loyalty bonuses of up to £500,000 after defecting from Tullett Prebon to one of its closest rivals, a court ruled today.

The ten brokers were at the centre of a bitter legal dispute in which Tullett accused rival BGC Partners and Anthony Verrier, a former senior Tullett executive who left to join BGC in 2008, of conducting an unlawful conspiracy to poach its senior staff.

Mr Justice Jack, sitting in the High Court in London, today ruled that BGC is liable for damages after inducing the brokers to breach their employment contracts with Tullett.

A hearing to determine how much BGC will have to pay will be held at a later date.

Although the brokers themselves were cleared of conspiracy and are free to start work at BGC next month, the judge said that Tullett is entitled to claw back loyalty bonuses and retention payments it gave to the brokers in the months before they quit the firm.

Those payments were as high as £500,000 for the most senior of the brokers, the judge said.

Today’s ruling brings to an end a bitterly fought legal dispute that was closely followed in the City and exposed the tribal, testosterone-fuelled competition between leading brokers in London.

Tullett took legal action in April last year after accusing BGC and Mr Verrier of conducting an illegal conspiracy to poach as many as 90 staff in an attempt to cripple its business.

Tullett alleged that Mr Verrier — who was formerly the second-highest ranking executive at Tullett but left in 2008 in acrimonious circumstances — breached the terms of a non-compete agreement by approaching its traders and using inside information he gained during his time at the company to convince them to join BGC.

Tullett claimed that Mr Verrier’s recruiting campaign took place at several of London’s most exclusive restaurants with the knowledge of BGC’s chairman and chief executive.

Twelve brokers quit Tullett to join BGC, although two changed their minds and stayed.

Clive Hyer, a partner at Rosenblatt, Tullett’s law firm, said: “This judgment reflects the severity of the numerous offences committed by BGC and its directors in their attempt to raid Tullett and entice ten members of its staff to breach their contracts and join BGC.

“We are delighted that justice has been done, that the conspiracy has been exposed, and to have secured such a significant result for our client, Tullett Prebon.”

The long-running case was notable for numerous colourful revelations and was at one point halted after a witness claimed that he had received death threats the night before giving evidence.

Although the matter was referred to police to investigate, the source of the threats was never revealed.

There was never any suggestion that BGC was connected to the threats.

The judge ruled last week that ten brokers who defected from Tullett to BGC were free to go ahead with the move.

Mr Justice Jack said that an injunction barring them from joining the rival brokerage, which was imposed at the start of the court proceedings, would expire on March 26, allowing them to return to work after a year out of the market.

One of the ten, Mark Yexley, was allowed to join BGC immediately and has started work, running a team of 30 traders in London.

Tullet Prebon has been the subject of takeover speculation in recent weeks after it received an approach, believed to be from an exchange eager to add a broking operation to its interests.

Source : The Times

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