LONDON, March 18 (Reuters) - Interdealer broker Tullett Prebon won a UK court case against BGC Partners on Thursday when the judge found its rival had joined in a conspiracy with former senior employees to poach brokers.
In a business where poaching is common, lawyers said the case stands out due to the scale of BGC's raid on Tullett and the egregious circumstances in the case, including animosity between Tullett's chief executive, Terry Smith, and its former global chief operating officer, Anthony Verrier.
'It won't stop poaching, but it provides a reminder that those doing the recruiting have legal risks,' said Peter Frost, global head of employment at law firm Herbert Smith.
Tullett Prebon, which last week said it was in takeover talks, went to London's High Court over the way its 'crown jewels' -- its brokers -- were recruited.
The UK case involved 10 brokers. Another two lawsuits between them are ongoing in the United States involving up to 90 brokers, said Mark Williamson, an analyst with KBC Peel Hunt.
'By no means is this the end of the story,' he added.
Tullett claimed a strategy co-ordinated by Verrier and BGC President Shaun Lynn used sham constructive dismissal claims to deliver Tullett employees to BGC earlier than they would have been entitled to under their Tullett contracts.
In his ruling, a High Court judge said Tullett's claims against BGC, Lynn and Verrier for conspiracy and inducing breach of contract succeeded, the Press Association reported.
'This is part litigation, part Greek tragedy,' said another lawyer, who did not want to be identified. 'There should be a, 'Tullett the Movie' and 'Tullett the Musical.'
The court documents cited a BGC offer to one Tullett desk head of a five-year contract, with a 413,000 pound ($631,000) payment upfront and a guaranteed minimum annual salary of 225,000 pounds for the first two years, plus more depending on the revenue he brought in.
A number of brokers claimed constructive dismissal for a variety of reasons to get out from under their Tullett contracts, but the judge ruled that these were not constructive dismissals, lawyers said.
'The court ruled that it is not OK to be an insider of a company and organize a concerted run on its employees,' said James Lisbon, a partner with law firm Mishcon de Reya.
'This is so far beyond the line that the courts are more than happy to uphold restrictive clauses in contracts,' he added. But it also shows that courts are moving toward upholding employment contracts more stringently, he said.
Tullett said in a statement the judge granted further injunctions and it also had the right to claim damages, which will be determined at a later hearing.
Tullett's shares rose 0.6 pence to 365.75 pence.
'We think this is a small positive for Tullett Prebon,' KBC Peel Hunt analysts said. 'Clearly the key factor for Tullett remains the ongoing bid situation.'
BGC Partners could not be reached for comment.
(Reporting by Steve Slater, Jane Merriman and Jane Baird; Editing by Rupert Winchester)
($1=.6545 Pound) Keywords: TULLETT/ (steve.slater@reuters.com; +44 207 542 4367; Reuters Messaging: steve.slater.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
In a business where poaching is common, lawyers said the case stands out due to the scale of BGC's raid on Tullett and the egregious circumstances in the case, including animosity between Tullett's chief executive, Terry Smith, and its former global chief operating officer, Anthony Verrier.
'It won't stop poaching, but it provides a reminder that those doing the recruiting have legal risks,' said Peter Frost, global head of employment at law firm Herbert Smith.
Tullett Prebon, which last week said it was in takeover talks, went to London's High Court over the way its 'crown jewels' -- its brokers -- were recruited.
The UK case involved 10 brokers. Another two lawsuits between them are ongoing in the United States involving up to 90 brokers, said Mark Williamson, an analyst with KBC Peel Hunt.
'By no means is this the end of the story,' he added.
Tullett claimed a strategy co-ordinated by Verrier and BGC President Shaun Lynn used sham constructive dismissal claims to deliver Tullett employees to BGC earlier than they would have been entitled to under their Tullett contracts.
In his ruling, a High Court judge said Tullett's claims against BGC, Lynn and Verrier for conspiracy and inducing breach of contract succeeded, the Press Association reported.
'This is part litigation, part Greek tragedy,' said another lawyer, who did not want to be identified. 'There should be a, 'Tullett the Movie' and 'Tullett the Musical.'
The court documents cited a BGC offer to one Tullett desk head of a five-year contract, with a 413,000 pound ($631,000) payment upfront and a guaranteed minimum annual salary of 225,000 pounds for the first two years, plus more depending on the revenue he brought in.
A number of brokers claimed constructive dismissal for a variety of reasons to get out from under their Tullett contracts, but the judge ruled that these were not constructive dismissals, lawyers said.
'The court ruled that it is not OK to be an insider of a company and organize a concerted run on its employees,' said James Lisbon, a partner with law firm Mishcon de Reya.
'This is so far beyond the line that the courts are more than happy to uphold restrictive clauses in contracts,' he added. But it also shows that courts are moving toward upholding employment contracts more stringently, he said.
Tullett said in a statement the judge granted further injunctions and it also had the right to claim damages, which will be determined at a later hearing.
Tullett's shares rose 0.6 pence to 365.75 pence.
'We think this is a small positive for Tullett Prebon,' KBC Peel Hunt analysts said. 'Clearly the key factor for Tullett remains the ongoing bid situation.'
BGC Partners could not be reached for comment.
(Reporting by Steve Slater, Jane Merriman and Jane Baird; Editing by Rupert Winchester)
($1=.6545 Pound) Keywords: TULLETT/ (steve.slater@reuters.com; +44 207 542 4367; Reuters Messaging: steve.slater.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
