Market operator the London Stock Exchange (LSE) has won a tribunal brought by the former CEO of Turquoise, the multilateral trading facility (MTF) the LSE acquired in February 2010.
Eli Lederman, who had headed Turquoise since its launch in August 2008, was dismissed during the takeover process. He had claimed this was done unfairly and that there had been a merger between Turquoise and the LSE's non-displayed pan-European MTF Baikal, which protected his existing contract terms under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE).
Under TUPE, employees of a business become employees of a new employer on the same terms and conditions when a business changes hands. Lederman said that he should have been informed and/or consulted about the change in ownership under TUPE.
The LSE admitted unfair dismissal but argued that Turquoise had continued to exist in its own right once it assumed majority ownership and therefore Lederman's dismissal at the time of the transfer was not covered by TUPE as he had not been taken on by a new employer. If the rule had been found to apply, he could have been liable for a greater amount of compensation than had previously been awarded.
However, according to the unanimous judgment of the tribunal, which began on 17 March, the claim of failure to inform/consult was “not well-founded”.
Court documents revealed that Turquoise made losses of Â£15.7 million in 2008 and Â£22.7 million in 2009. The consortium of brokers that had launched Turquoise as a low-cost alternative to trading on national exchanges, specifically the LSE, had initially forecast turning a profit by late 2009.
The LSE agreed to take a 60% stake in Turquoise on 21 December 2009, with the founders maintaining minority holdings, at which point the MTF commanded a 2.99% share of pan-European equity trading.
As part of the deal, the LSE took on Â£20 million (€22.6 million) of costs to cover technology, restructuring and integration at the MTF, and said it would fund the operation for a two-year period.
Responding to the judgment, the LSE said in a statement, “The tribunal’s decision reflects the independent nature of Turquoise’s position within the wider group, that of an ambitious joint partnership with some of our biggest clients, dedicated to transforming the European trading landscape.”