Share our passion for law and keep up to date
Author: David Seals
A well drafted contract of employment will normally contain a robust provision restricting the employee from disclosing the employer’s confidential information. But breaches of confidentiality do not regularly feature in employment cases that come before the Courts. There are various reasons why an employer may not pursue such matters. However, the position for employees in regulated sectors such as the banking industry who misuse confidential information is more fraught, as the case referred to below demonstrates.
In March this year the FCA fined Christopher Niehaus, Managing Director of the investment division of Jefferies International Limited, £37,000 for misuse of confidential information.
Mr Niehaus, an approved person under FCA rules, had used WhatsApp to send messages to a friend and an acquaintance disclosing confidential information regarding transactions he was involved in at work including the name of a client. Significantly, there was no evidence of market abuse here. Mr Niehaus had made no financial gain as a result of the breach. He had simply been showing off about his role in transactions and how much he stood to earn as a result.
The FCA said that, but for his early admission of wrongdoing and the settlement of the case by Mr Niehaus at stage 1 of the settlement period, the fine would have been £53,000.
More worrying for Mr Niehaus is the potential damage he has done to his career. He resigned from his position at the bank as a result of the incident and the publicity he has attracted is unlikely to impress future employers. The FCA’s decision is openly available on the internet for anyone to read about.
So a cautionary tail for workers in regulated sectors in particular. In non-regulated sectors, the misuse of confidential information is still a potentially serious matter. Employees who disclose confidential data outside the scope of their duties face potential dismissal. But employers should not be complacent about protecting their (and their clients’) confidential data. Whilst the general law protects against unauthorised disclosure of trade secrets and information akin to a trade secret it will not cover all the information an employer may regard as confidential. They should therefore ensure employees’ contracts and staff handbooks / policy documents are properly drafted to cover this important area.