High court throws out 'incredible' £6m bonus claim by ex-Investec traders

Andrew Brogden and Robert Reid had alleged that the firm failed to honour an unwritten bonus agreement for 2010-2011

The Guardian, Agencies, Wednesday 6 August 2014

The pair had claimed more than £6m in bonuses despite their business
having made losses. Photograph: Getty Images

Two former Investec traders lost a three-year, £6m battle over their bonuses on Wednesday in a case described by a London high court judge as fanciful and "wholly incredible".

Andrew Brogden and Robert Reid, the former head and deputy head of the bank's structured equity derivatives desk, alleged that the firm failed to honour an unwritten bonus agreement for 2010-2011 made when they joined the bank in 2007. The pair claimed more than £6m in bonuses despite their business having made losses.

The bank said it paid bonuses of £150,000 to Brogden and £100,000 to Reid in June 2011, which the two men accepted. Both men left the bank a month later and launched their case shortly afterwards, an Investec spokesman said.

Investec dismissed suggestions it had orally agreed to pay bonuses to Brogden and Reid according to an "economic value added" formula, which ignored actual profit and loss and referred instead to theoretical savings made by the bank, calculated by reference to rates in the bond market.

Dismissing all the claims against the bank, judge George Leggatt said: "I regard their claim that an oral agreement was made to use the 'institutional market rate' in calculating their bonuses as wholly incredible."

He said both men struck him as decent and highly talented and they genuinely believed they had developed a retail structured product business which generated economic value for the bank to which they were entitled to a share. But Leggatt said the court could only judge what was fair in terms of contract.

The two were ordered to pay Investec's costs of more than £1.5m.

Lawyers have said that a legal victory scored in 2012 by 104 London-based bankers against Commerzbank, after Germany's second-largest lender slashed their bonuses in the wake of huge investment bank losses, could spur other aggrieved staff to sue firms in payout disputes. Commerzbank was ordered to pay €50m (£40m) to the bankers who sued after they were offered only a 10th of the amount.

But Leggatt said on Wednesday that although he did not think Brogden and Reid's evidence was invented or dishonest, he had been persuaded that no oral accord had been made during pre-contractual discussions.

"Not only did they seem to me to be sincere and straightforward individuals, but the account they gave does not have the hallmarks of deliberate concoction. It much more likely has its origin in something actually said, however great the distortion in the claimants' recollections," he said.

Lawyers for Brogden and Reid were not immediately available for comment.

David Van Der Walt, the chief executive of Investec in London, said: "This was a baseless claim and an unwarranted attack on our institution, our culture and values. It is unfortunate that these claims were ever issued, but we move on from here."