The judgment of Mrs Justice Moulder today in ECU Group PLC v HSBC Bank PLC & Ors [2021] EWHC 2875 (Comm) contains another example of the dangers of relying on expert evidence.  The judge did not accept the evidence of the claimant’s expert, evidence that played a key role in the claimant’s case.


The claimants brought an action for breach of confidence in relation to share trading that took place in 2004-2006.    Both parties instructed experts. The judge noted that “This is therefore a case where in relation to the substantive claims, the expert evidence plays a key role and the court has to be satisfied that the expert witnesses can properly give the opinions that they express and that those opinions have a sufficient evidential foundation to be relied upon.”


The judge considered the reports of the two experts.  For several reasons she was not impressed with the witness evidence adduced on behalf of the claimant. First looking at the claimant’s expert.

His experience
  1. The Defendants sought to criticise Mr Gladwin on the basis of his experience of FX trading. It was submitted for the Defendants that unlike Mr Moore, Mr Gladwin had never been a spot FX trader or held any other “desk level role” in spot FX (Paragraph 58 Defendants’ Opening Submissions).
  2. In cross examination Mr Gladwin said that he had traded spot FX although it is clear that on such occasions he was not trading with the frequency of a spot FX dealer. Nevertheless he was Global FX Head at Lehman Brothers Europe (2006-2008) and Global Head of Foreign Exchange at Nomura International Plc (2008-2011). In my view anyone holding these roles would have had to understand the FX market in order to carry out their responsibilities as head of the desk. I do not accept therefore that Mr Gladwin was not competent to give an expert view of the spot FX market and the nature of the trading by the Defendants at the relevant time.
  3. However despite his experience of the FX market I have the following concerns about his evidence:
109.1.     His failure to correct his reports;
109.2.     His assumptions;
109.3.     The level of certainty in his conclusions;
109.4.     His presentation of data.
His failure to correct his reports
  1. Mr Gladwin had not previously given expert evidence to a court. Whilst of course this is not a prerequisite, when adopting his expert reports as his evidence, Mr Gladwin failed to mention two instances where he had subsequently changed his conclusions as expressed in his reports. He acknowledged his change of view when the points were put to him in cross examination and explained that he had assumed that the points would be covered during his evidence.
  2. I accept that in relation to Trade 18 (12 April 2005) new EBS data had become available to Mr Gladwin only a few days before he gave evidence such that he had not had time to produce a further report. However his evidence was that he had examined the new data in relation to this particular trade and it is perhaps surprising that it was not made clear to him by those who instructed him, that he should have raised any changes to the conclusions of his reports arising out of the new data at the outset of his evidence. In this particular case the new data showed the direction of trading and led him to withdraw his previous assertion that Mr O’Sullivan had engaged in illegitimate proprietary trading.
  3. The second instance related to Trade 32 (30 May 2006) where Mr Gladwin did not identify at the outset of his oral evidence that he was in fact aware that his conclusion of trading ahead by Mr Davies could not be maintained in light of the fact that the SWIFT data which showed that the trade was executed by UBS and not as Mr Gladwin stated in his report, HBEU. Although Mr Gladwin acknowledged in cross examination that he had made a mistake, it was clear from his evidence that he was aware of the mistake and yet he failed to mention this at the outset of giving evidence.
  4. Whilst I accept his personal lack of familiarity with the court process, these were material allegations and should not have been left to counsel to highlight in cross examination. Even if one assumes this was an error borne of ignorance on the part of Mr Gladwin, the errors emphasize the caution which the court needs to adopt in considering the conclusions of Mr Gladwin especially where, as in the case of Trade 18, the conclusion is based on incomplete data, and even where the conclusions of Mr Gladwin on a particular trade are apparently firmly held and expressed as such in the reports.
His assumptions
  1. A further troubling aspect of Mr Gladwin’s evidence was that it appeared on a number of occasions that Mr Gladwin, having formed a view that the Defendants had engaged in misconduct, gave his oral evidence in a way which appeared to be advancing the Claimant’s case rather than providing his objective opinion. For example, Mr Gladwin approached his evidence and formed his opinions on the basis that the Claimant had instructed the Defendants not to trade ahead and thus any trading ahead was prohibited. Although counsel for the Defendants in the course of cross examination told Mr Gladwin that the issue of whether such instructions had been given was a matter in dispute between the parties and for the court to determine, Mr Gladwin continued throughout his four days of giving evidence to refer to the issue of instructions as a fact which had been established and thus supported the Claimant’s case in relation to trading ahead. One such example (of a number) was in relation to Trade 19 where the relevant exchange was as follows:
  2. Yes, and wouldn’t a fair view of this, Mr Gladwin, to use my train metaphor, you may say the metaphor is inapposite, be that Mr Nettleingham was getting on the train at this stage rather than jumping into the cab trying to drive it?
  3. Again, it depends upon the type of order that he had. He was told not to get on the train until it had passed his stop”
  4. Not only did Mr Gladwin continue to refer to the instructions having been given to the Defendants but he also postulated that similar instructions had been given to the other banks which were given part of the stop loss orders. There was no apparent basis for this assumption and in my view, it was another example of Mr Gladwin appearing to wish to support the Claimant’s case by his evidence.
  5. It was submitted for the Claimant (M/22 p135) that it was clear on the evidence of Mr McEvoy that instructions that there should be no trading ahead were relayed so the attack on Mr Gladwin by counsel for the Defendants was misplaced. However in this context the issue is not how the disputed issue is ultimately resolved by the court on the evidence but how Mr Gladwin approached his task of giving expert evidence and whether he did so objectively.
  6. A further example of his approach to giving evidence which raised a concern as to whether or not Mr Gladwin was able to give objective evidence to the court or whether having formed an opinion on the behaviour of the Defendants, he sought to bolster that opinion in a partisan manner was the following examples of his evidence in relation to Trade 19 and Trade 26 respectively.
  7. In relation to Trade 19 (18 April 2005) the relevant passage is as follows:
Q…In fact by 14.31.30 in this table, about two thirds of the way down, you see that the prices have started to rise up?
  1. That’s right.
  2. Yes, and this despite the fact that Mr Nettleingham continues to sell aggressively?
  3. Absolutely.
  4. And this tends to show, doesn’t it, thatselling of this scale doesn’t control the direction of the market, does it?
  5. It doesn’t necessarily, certainly not when spread out over a period of time.
  6. Well, I mean, we’ve got him selling in a time slice, 15.31.17, 23 million and the price goes up?
  7. 20 million of that was sold to HSBC New York.
  8. What’s that got to do with it?
  9. Well, clearly they were a large buyer at that point…”
  10. Mr MacLean went back to this point a few minutes later in cross examination and sought clarification on Mr Gladwin’s evidence concerning selling to HSBC New York:
Q…Mr Gladwin, looking at your D.1/1/357, the table, and I was asking you about the trading taking place in the single second time slice and pointing out that it doesn’t cause the market price to fall and you said, oh well, part of that trading was with HSBC New York. Now, just so that we’re clear, we can see here in this data that part of the trading was with HSBC New York, correct?
  1. That’s correct.
  2. But at the time prior to doing the trading, before they clicked on the button, traders would not have known with whom they’re dealing. That’s right, isn’t it?
  3. That’s right at that time.
  4. So they wouldn’t have known?
  5. That’s correct.
  6. Just another counterparty in the market as far as they were concerned?
  7. That’s correct.”
  8. In my view this is an example of where Mr Gladwin gave oral evidence to bolster the conclusion that he had already reached but where the evidence when tested did not in fact provide support for the conclusion expressed.
  9. In relation to Trade 26 Mr Gladwin said in his report at 2.2.5:
I don’t know why Mr Sarramenga was buying when Mr Courtney was selling but leaving a bid at the trigger level in a small amount during a volatile market could be a strategy for triggering an order.” [emphasis added]
  1. It was put to Mr Gladwin in cross examination that this was pure speculation. Mr Gladwin’s evidence was that:
It’s one possible thing that he could have been doing.”
Mr Gladwin was asked if he had ever seen this strategy in operation to which he replied:
I have no personal experience not having worked in an organisation that would tolerate that kind of behaviour.” [emphasis added]
  1. The clear inference from this response (although he denied it) was that Mr Gladwin had concluded that the Defendants had engaged in unacceptable behaviour. It was in my view a gratuitous comment from someone who was being asked to give an independent view on the inferences that could properly be drawn from the data. I also note that Mr Moore by contrast was of the opinion that:
In my opinion and experience, expressing an interest to purchase a currency pair could not form part of a strategy to trigger a stop loss sell order for a currency pair.”
The degree of certainty in his conclusions
  1. Mr Gladwin expressed his opinions in his report often in a categoric fashion leaving little or no apparent room for doubt as to the inferences which could or should be drawn. However although reading his reports one might assume that the data was clear that the traders had engaged in front running and/or trading ahead and/or proprietary trading, it was established in cross examination that in some instances the opinions were not as firm as might appear on their face or were not supported by the evidence.
  2. For example, as referred to above, having apparently been firm in his conclusion on proprietary trading by Mr O’Sullivan on Trade 18, Mr Gladwin subsequently changed his opinion on that trade having received and considered additional data.
  3. In his first report Mr Gladwin said in relation to the trade on 12 April 2005 (Trade 18):
It should be noted that at 14.46.24, 7 seconds after being told how close ECU’s stop loss order was, Mr O’Sullivan makes three trades totalling 5 million dollars US Swiss. I do not know whether these trades are buys or sells, but the timing seems very suspicious. There is then more activity by a number of traders in the short run up to the trigger, including another USD10 million from Mr O’Sullivan. There is USD 15 million of activity during the 12.48.45 time slice. We do not know the true direction of this trading but if it was all buying then this would have added to the upward price pressure prior to the trigger…” [emphasis added]
  1. In his second supplemental report Mr Gladwin said in relation to this trade:
“Whilst we do not know exactly how Mr O’Sullivan was trading, the sudden and unusual increase in his dollar Swiss activity immediately after the conversation with Mr Scott and its concentration in the period immediately before and after the trigger leads me to conclude that it is likely to be proprietary trading based on knowledge of ECU’s stop loss order level.” [emphasis added]
  1. Mr Gladwin was asked in cross examination to explain how he was able to go from a position of “suspicion” in his first report to a conclusion that it was “likely to be proprietary trading”. Mr Gladwin said that after considering Mr Moore’s supplemental report he had considered the analysis of trading over the whole day and he concluded that someone who had traded almost nothing in dollar Swiss all day and then carried out most of his trading around the time of the trigger, made his view firmer that the trader was in fact carrying out proprietary trading.
  2. However as referred to above, shortly before Mr Gladwin was to give his expert evidence and during the course of the trial, it would appear that EBS produced data which showed the direction of trading. Mr Gladwin acknowledged that if the trading was in fact selling it would not be “suspicious” because it would be in the wrong direction for the trade. Mr Gladwin stated that having considered the new data, he was wrong to assert that Mr O’Sullivan was engaged in illegitimate proprietary trading.
  3. A further example of his apparently firm view expressed in his report being withdrawn is in relation to Mr Barnett and Trade 7. At paragraph 2.2.215 of his report Mr Gladwin said:
“It should be noted that Robert Barnet again buys before the likely ECU order execution begins and sells at the end of the likely execution…  I am of the opinion that he is taking proprietary positions using the confidential information of ECU order-buying at the start of the execution of their order and selling after the execution has moved the price higher.”
  1. However in cross examination Mr Gladwin accepted that in fact Mr Barnett sold 10 points away from the trigger and this did not accord with Mr Gladwin’s assertion. The relevant exchange was as follows:
Q: So if he was thinking when he did these trades at the trigger level as you say he was, he sold out way too early, didn’t he?
A: Yes. 
Q: Don’t you think from your experience if he was thinking of that order, isn’t it very odd that he didn’t hang on till the trigger level had been reached?
A:  Yes, in this case it does look a bit odd.
Q: Do you want to withdraw the assertion Mr Barrett was engaging in an improper breach of confidential information or do you wish to maintain that?
A: Well, in the case of the dollar/Swiss on this one it does look a bit peculiar.
Q: Yes, it does.  Would you like to answer my question?
A: In the case of dollar/Swiss, yes.”
  1. An example of Mr Gladwin expressing an opinion which was not properly supported by the evidence was in relation to Trade 21. In the joint memorandum it was agreed between the experts that there was insufficient data to reach an opinion as to whether the defendants’ trading ahead materially influenced the currency pair. However in his original report Mr Gladwin said:
3.1 No trading deal records have been disclosed which show any trading by the defendants so we cannot know by how much, if at all, they may have influenced the currency pairHowever the contemporaneous price data is consistent with someone trading ahead of the order, with an intention to influence the EUR/GBP price so as to trigger that order. As stated above, I consider that this order was executed by the FX desk of HBHK.
3.2 At this time of day it would have been very easy to influence the currency pair given the prevailing liquidity and the size of ECU’s order.” [emphasis added]
  1. In cross examination Mr Gladwin was asked:
Why can’t you simply say in answer to the question, “did the trading ahead materially influence the currency pair?” that “I do not have sufficient information to answer that question”?
Mr Gladwin’s response was:
I’ve simply added some more colour about the market trading at that time.”
  1. In my view this was not additional “colour”: there is a clear inference that Mr Gladwin was linking the trading ahead with the Defendants/HBHK on the basis it was possible for a bank to influence the relevant market but without any trading data from HBHK on which to support that conclusion.
His presentation of data
  1. Whilst Mr Gladwin apparently had experience in analysing FX data, the use of certain statistics to support his opinions were clearly flawed.
  2. For example, in his second supplementary report in relation to Trade 22, Mr Gladwin stated that Mr Davies was trading using his knowledge of ECU’s order. He stated (paragraph 2.8.3):
“Mr Davies makes his first purchase in the period prior to the trigger of 14.44.57. This is exactly the same time when James Courtney begins buying. Mr Davies switches from buying to selling at 15.46.21, 11 seconds after the trigger of the order and 38 seconds after his last purchase. During the whole day the average time between switching the direction of his trading by Mr Davies is 4.48 and the median time is 3. It therefore seems unusual to me that he would have switched from buying to selling so quickly, especially at the time frame straddles the trigger time quite tightly. After Mr Davies sale of 1 million at 15.46.45, he does not trade again until 15.53.29, 6 minutes and 44 seconds later.”
  1. Although when it was put to Mr Gladwin in cross examination that this was a misuse of statistics in an effort to establish his proposition that Mr Davies was doing something illegitimate Mr Gladwin replied:
“It suggests that he switches here far more quickly than he usually does during the day.”
This was not a satisfactory explanation and in my view was not an appropriate statistic to have used in support of his opinion.
  1. I am also of the view that the presentation of data in graphs was unhelpful to the court where the X axis was not presented in a linear fashion. It was submitted for the Claimant that the presentation reflected the relevant time slices but I do not believe that these graphs were helpful to the court as a result of the presentation of the data.
Conclusion on credibility of Mr Gladwin
  1. It was submitted for the Claimant that when considering the individual trade reports the court will find “again and again Mr Gladwin considering a range of different hypotheses acknowledging doubts and giving traders the benefit of the doubt where appropriate”.
  2. However when the court looks at the overall approach of Mr Gladwin as set out in his “Executive Summary” I note that he sets out his views in firm and far-reaching terms. At paragraph 1.1.2 of his report he said:
The analysis of each individual Trade is set out in detail in the  individual  reports at Section  C  of this  Report. As summarised below, I identify repeated systematic misconduct by a range of foreign exchange traders and other FX personnel at HBEU and HBUS…” [emphasis added]
At 2.1.1 under “Overview of Findings”:
My analysis [of the individual trades] at Section C demonstrates widespread misconduct by HSBC’s FX traders.  The picture that emerges from the trading data is of the routine and systematic abuse of ECU’s stop loss orders.  This includes a significant number of traders albeit with certain individuals particularly prominent and points to a wider cultural   problem at the trading desks.” [emphasis added]
Under “Key Findings” and “Front running” Mr Gladwin stated (paragraph 3.1.1):
A pattern of consistent front running emerges from HSBC’s trading activity.  Across ECU’s 32 trades, 16 were front run and three more bear the hallmarks of front running although the data is too incomplete to reach a firm conclusion (at least on the basis of the data alone)…” [emphasis added]
  1. Mr Gladwin accepted in cross examination that ECU has dropped its allegations of front running in relation to ten out of 32 Stop Loss Orders and he was unable to support the remaining allegations as far as six of them are concerned (Trades 3, 20, 21, 23, 24 and 32). Thus the trades which Mr Gladwin is of the view there was front running are Trades 7- 11, 14, 15-19, 25 and 26- 29.
  2. At paragraph 3.1.2 under the subheading of “A clear pattern”, Mr Gladwin said that:
The breakdown of the HSBC’s front running is notable.  Across the six trades executed between 6 February 2004 and 19 October 2004, only one bears the hallmarks of front running, although the data is incomplete. However, of the 14 subsequent orders between 26 October 2004 [Trade 7] and 12 May 2005 [Trade 20], every single order appears to have been front run to some extent.” [emphasis added]
  1. When this was challenged in cross examination on the basis that Trades 12 and 13 have been abandoned and Mr Gladwin had found no evidence of deliberate manipulation in relation to those orders, Mr Gladwin replied:
That front run really should have said traded ahead.”
  1. This is in my view not a satisfactory explanation for his sweeping statement in paragraph 3.1.2, in light of the fact that, at paragraph 2.1.4 of his report, Mr Gladwin referred to the “significant” distinction which he drew in his report between trading ahead and “front running”. He said:
Across the 32 stop-loss orders placed with HSBC, I have concluded that the bank’s traders traded ahead of 27 trades, and that in respect of 15 trades this was done in a manner deliberately intended to trigger the orderThe distinction is a significant one in the context of this Report.  In my analysis of Issue 2 for each Trade I analyse whether HSBC’s traders traded ahead of the stop-loss order, and in my analysis of Issue 3 I assess whether this was deliberate.” [emphasis added]
  1. The significance of the distinction drawn by Mr Gladwin in his report between trading ahead and front running is further stressed at paragraph 2.1.6 of the report where Mr Gladwin said:
“In 12 cases, from the data made available (which in many cases I accept does not represent the full picture), I consider that HSBC’s traders did not seek to move the market despite trading ahead of the stop-loss order.  Subject to my comments above, I do not comment further as to whether such trading ahead  was permissible under the terms of the orders placed by ECU with the bank.   However, in 15 cases I have determined that HSBC’s traders traded ahead with the intention of targeting ECU’s stop-loss orders, and there is also circumstantial evidence pointing to similar activity in respect of two further orders. Trading ahead of this type means that the bank’s traders deliberately set out to manipulate the prevailing  spot FX  rate  to trigger  the relevant  stop-loss orders.  In this Report, I use the term ‘front-running’ to describe trading ahead of  this sort, which requires  deliberate,  intentional  conduct…” [emphasis added]
  1. In the light of these passages in his report I do not accept that Mr Gladwin made a mistake and intended to refer to trading ahead in paragraph 3.1.2.
  2. Mr Gladwin was also challenged in cross examination on paragraph 3.1.3 of his report where he stated:
“It follows that of the orders executed between 26 October 2004 (Trade 7) and 31 January 2006 (Trade 29), I have concluded that 21 of 23 stop loss orders were either front run or bear the hallmarks of front running…” [emphasis added]
  1. Mr Gladwin accepted that this statement was not correct on the basis that Trades 12 and 13 have been abandoned, Trade 22 has been abandoned, he did not support a claim of front running of Trade 20 and had no evidence to support the claim of front running on Trade 24. In fact the correct number according to Mr Gladwin’s conclusions on the individual trades would appear to be 16 out of 23 trades (Trades 7- 11, 14, 15-19, 25 and 26- 29).
  2. These incorrect statements of his own findings call into question his conclusion at paragraph 3.1.4:
“In short, apart from the period up to 26 October 2004 (prior to which ECU’s stop-loss orders were generally somewhat smaller  in  size)  and  the  period  after  ECU’s complaint in February 2006, I  have identified  a consistent pattern of front-running  of ECU’s stop-loss orders.  This amounted to the systematic exploitation of ECU and its clients for HSBC’s benefit.” [emphasis added]
  1. These statements and assertions of a “consistent pattern of front-running” in paragraph 3.1 illustrate Mr Gladwin’s views and overall approach to the issues. Whilst I believe Mr Gladwin sought to give his honest opinion, I believe that he allowed himself to lose objectivity in his analysis and in some instances, on the individual trades expressed his conclusions with a greater degree of certainty than the raw data available to him would justify.
  2. In the light of the matters discussed above, I have considerable misgivings about the reliability of the opinions that he expresses in his reports and a concern that he has approached his analysis in a way which tended to confirm his views rather than put before the court a balanced view of the possible (and likely) conclusions which can properly be drawn from the available data. Although I have had regard to his views in making my findings, I cannot give any independent weight to his conclusions and look to see whether his conclusions are supported by other evidence and where his views conflict with those of  Mr Moore, I am inclined to prefer the evidence of Mr Moore, as discussed below.
Mr Moore
  1. Mr Moore had not given expert evidence before and has only prepared one other expert report. Mr Moore is not a lawyer and in his report was not expressing himself in legal terms or with the precision that might perhaps be expected from a lawyer. He wrote an extremely long report and insofar as Counsel for the Claimant appeared to criticise Mr Moore for his terminology on occasions, for example as to a heading in his report, that was in my view unfair and without substance.
  2. Mr Moore was frank as to the extent that he had used others to help prepare his report and there can be no doubt having heard him give evidence over 4 days that he had a detailed and comprehensive grasp of the matters in his report and that the opinions he expressed were clearly his own and were the product of careful analysis and consideration by him and not by others.
  3. Mr Moore had not seen the witness statements of the Defendants and had not seen all the contemporaneous documents that were before the court e.g. transcripts of certain telephone conversations. Mr Moore accepted in cross examination that had he seen the evidence of Mr Brown and Mr McEvoy, that “may have added to [his] knowledge [as to the motivation behind any trading ahead]”.
  4. Whilst noting Mr Moore’s response in cross examination, it is unclear what real “disadvantage” ECU implies (Paragraph 82 of Closing Submissions) has resulted from the fact that Mr Moore had not seen these witness statements. I do not regard the fact that Mr Moore had not considered the witness statements of Mr Brown and Mr McEvoy as likely to have a material effect on his conclusions on front running, given that neither of these individuals were directly involved in the trading by HSBC traders which is alleged to have deliberately triggered the stop loss orders.
  5. It was further submitted for ECU (paragraph 82.2 of Closing submissions) that Mr Moore’s evidence was “robbed of its essential context” because he ignored the terms of ECU’s orders.
  6. I see no force in that submission. Mr Moore agreed that “if it was the case that HBEU knew that it was not allowed to trade ahead of [the] stop loss orders”, that would have been “a relevant fact”. The question of whether valid instructions were given to HSBC not to trade ahead is an issue in these proceedings and therefore Mr Moore could only have proceeded on the “hypothesis or assumption” and even if such an assumption were made, the conclusion as to whether any trading ahead of a trigger was in breach of instructions is only valid if the facts of a particular trade show that the trading is not otherwise permitted (as would be the case if it were unrelated to the ECU order). I note that in his report (paragraph 28) Mr Moore made the conservative assumption (which he acknowledged was “unhelpful” to HSBC) that all trading in the period immediately preceding the trigger of a stop loss order in the direction of the stop loss order was related to that stop loss order, although he stated that this was an “unrealistic” assumption as there would be trading that related to other customer business or the trader’s management of their own risk.
  7. ECU also criticised Mr Moore (paragraph 82.4 of Closing Submissions) for taking as a “starting point” that:
“…the trading associated with a  pre-hedge  to  reduce  order  slippage  can  seem virtually identical to the trading that would be observed if the trader was acting nefariously to cause the Stop Loss order to be triggered.” (Paragraph 134 of his report)
  1. It does not seem to me to have been the “starting point” for Mr Moore appearing as it does part way through a section in his report entitled “Pre-hedging”. More significantly I do not accept that there is anything amiss with this statement and it appeared to be accepted by Mr Gladwin in cross examination that the data alone does not provide any indication as to the motive for the trading ahead of the trigger:
Q. …when we look at the trading data which we have, if there was trading ahead for a “nefarious purpose”, if there was trading ahead for a benign purpose, if there was trading ahead to fill a customer order, and if there was trading for the purposes of altering the position, these are likely to look identical in terms of the raw data which is available to you?
  1. That’s correct.  Other than, of course, we have some extra data, which is we know that they executed ECU’s order and we know the size of that, and we can therefore fairly match that part of their activity, probably, against ECU…
“Q. …when you look at the data itself that you have been presented with, the actual cause or reason for the trading is not apparent on the face of the data, is it?
  1. That’s correct.
  2. You simply see a stream of figures which is uninformative as to precisely why the trader was doing what he was doing –
  3. Yes.
  4. — from the figures itself, correct?
  5. No, it is clearly not uninformative, because it is what he was actually doing.  So it tells you what he was doing, it is very informative from that perspective.
  6. Okay, fair enough. But not why he was doing it?
  7. No.” [emphasis added]
  8. I also note that in his evidence in cross examination Mr Gladwin accepted that:
“As Mr Moore refers to in his own report, a trader needs to be extremely careful, when adjusting his own position, not to interfere with the client order.  It is almost impossible to determine from the data that we have whether it is carried out for legitimate purposes or a nefarious one, “nefarious” being his choice of words.  But it is entirely permissible, of course, for them to carry out other client business, according to strict rules which should have been communicated to all people who left order with them…” [emphasis added]
  1. The issue of trading ahead in breach of instructions was covered in cross examination of Mr Moore but Mr Moore’s apparent acceptance that any breach of an instruction given not to trade ahead was “serious” and his evidence that at Citibank would have attracted disciplinary sanction, is of no relevance to the issue for this court as to whether such an instruction was in fact validly given to HSBC or the motive behind any trading which took place ahead of the trigger. Similarly Mr Moore’s views on the meaning of the market codes of conduct in this regard were of limited, if any, significance.
  2. Mr Moore was criticised by ECU for failing to differentiate between orders which required the rate to trade “through” a level as opposed to orders which triggered when the rate was “above” or “below” the trigger. It was submitted for ECU (paragraph 82.4 of Closing Submissions) that this had a significant impact on his assessment of the timing and scale of the trading activity that took place before the trigger.
  3. I accept that the determination of the trigger time affects the assessment of the timing and scale of the trading activity that took place before the trigger but it seems to me that the difference between the experts did not lie in any failure on the part of Mr Moore to distinguish between an order to trade “through” or “above/below”. It seems to me that the key difference between the experts was that Mr Gladwin took the trigger time from EBS whereas Mr Moore’s evidence was that there was no one prevailing market rate on which people could make a determination and accordingly the trigger involved a judgment on the part of the trader having regard to the market including but not limited to EBS or Reuters data. Mr Moore explained that:
“…[Mr Gladwin’s approach] presupposes there is one prevailing market rate on which people can make a determination on an order trigger. …, we see in Trade 18, in a one second time slice we see the market trade at 1.1987 and 1.2005 in EBS. Now in that trade, Mr Gladwin takes the earlier time but my judgment in that trade is that the dealers in HBEU had not mentally decided to trigger the order and as a trader it would be routine to see things trade on an EBS screen or a Reuters screen and not mentally trigger the order because you would be trying to keep the customer in.”
  1. Mr Moore explained the different approach as follows:
“…I think Mr Gladwin uses in his methodology EBS trading at a rate at or above the stop loss order level and my evidence is that the decision to exercise a stop loss is a judgment that would certainly include that but isn’t confined to that…”
  1. Trade 18 is an example where the trigger time was different by 22 seconds but Mr Moore explained the reason for his trigger as follows:
“…I think this illustrates the methodology difference quite nicely because in the same — in Mr Gladwin’s trigger time selected, the market trades at 1.19.87 and 1.20.05, 1.20.05 being above the stop loss order level. That Mr Gladwin’s methodology is the trigger time. I think that HBEU traders didn’t select – believe that they were executing the order until my trigger time, partly because that is when we see activity in the market but also in the intervening 20 seconds you see some sales in the opposite direction to the order at a time when if they were executing the order I wouldn’t expect to see those sales.”
  1. Although ECU does not go so far as to directly assert that Mr Moore was biased in favour of the Defendants, ECU submitted (paragraph 81 of Closing Submissions) that:
“The evidence …betrayed Mr Moore’s inclination to treat traders with the greatest possible indulgence
  1. In support of its submission ECU pointed to a failure to consider the cumulative wrongdoing of traders, the extent of wrongdoing for which the same traders had been “deemed guilty” by other regulatory or prosecuting authorities and a failure to take into account the instructions not to trade ahead.
  2. I have already addressed the fact that Mr Moore did not take into account the issue of any instructions to HSBC not to trade ahead and this provides no support for ECU’s submission that Mr Moore was “inclined to defend the traders”. As to the second point, in my view it would have been entirely inappropriate for Mr Moore to have been influenced in his analysis of the data by inferences drawn from the subsequent US or UK proceedings. His role was to give expert evidence on the FX market and the data. Any wider inferences to be drawn from the evidence in reaching conclusions on the allegations is a matter for the court.
  3. Similarly as to the third point, I note Mr Moore’s evidence that he did consider Mr Gladwin’s view on the behaviour of a number of traders together but cautioned that it was necessary to consider the context in which the trading occurred. In the context of Trade 18 (12 April 2005) the relevant exchange in cross examination was as follows:
  4. Does it affect your assessment, with all of your experience, if there is more than one person behaving in the way that you have read, or do you silo them and analyse individually their respective trading?
  5. So in — I am just reflecting on how I did the work on Mr Gladwin’s report.  I did look at the individual trading in light of the points that Mr Gladwin had made. But what I would suggest that Mr Gladwin did was to rule out the notion that anything other than the ECU Group order was paramount in a trader’s mind.  On a busy spot desk, with figures just out, operating in one of the top five, I think we said last week, market-makers, every spot desk would have been if you had looked at their trading, because they are the intermediaries through which the end users establish what risk they are taking, if we picked any spot desk, my guess would be, and it is a guess but based on experience, they would all look like buyers because the intermediaries were buying  dollar/Swiss there.
  1. You know I have seen multiple examples in time when if you simply look at the trading you could reach a somewhat condemning view of the trading without    understanding the context and I try to take that context into account. That said, on eight occasions, even with that context, I agreed with Mr Gladwin and I think on five occasions I think Mr Gladwin’s hypothesis was ranked as an equally likely hypothesis.  But where I have individually looked at the trades I have done that based on the data that I have looked at.”
  2. As to any inferences to be drawn from the conduct of traders in relation to the overall trading in my view that is a matter for the court and not the expert witness.
  3. In my view Mr Moore sought in his oral evidence to explain to the court the reality of the FX dealing desk and present the facts that the traders were often responding to market movements, in some cases sharp movements, and that the court is looking with the benefit of hindsight at the trading that the traders decided in the very short time periods to do. His evidence sought to inform the court as to the context of the data:
A… We are attributing, in less time than it took you to ask me the question, we are attributing these motives to traders who aren’t here to defend themselves and I think it is unreasonable and unfair. I mean, in that environment the market would have been moving up incredibly sharply. He would have had a stop loss, he would have been somewhat panicked by that, and if that line continued up another 50 points instead of stopping, which we know it did, he would have been looking at a very bad fill for the client. So those are — the facts you present to me, Mr Lissack, are accurate. The negative connotation on the trader might be unfair.
  1. This explanation of the context in which the trader was operating entirely accords in my view with his role as an expert on the FX market and does not establish a lack of objectivity on the part of Mr Moore.
  2. Further in my view Mr Moore gave reasons for arriving at his conclusions which were clearly considered and he was prepared to acknowledge when Mr Gladwin’s view was one with which he agreed. It is notable that ECU in its Closing Submissions (paragraph 79) in support of its contention that Mr Moore “was inclined to a generous interpretation” did not include the whole of the following exchange in which Mr Moore in my view not only clearly sets out his reasoning for his opinion based on what was happening in the market (and not on any unsupported tendency to defend traders) but also acknowledged the extent to which he could agree with Mr Gladwin:
“A. And I tended to manage spot dealers and defended them in my career because it is easy to condemn a dealer. I think the other factors that I refer to at the time, the Canada was strengthening, the impact was in dollar/Canada rather than dollar/yen, the size of dollar/yen movement at the time was — the volume of dollar/yen was significant around that time, so it wasn’t just the ECU order. So I can’t rule out what Mr Gladwin says but I think it is not certain.
  1. No, it may not be certain. All I am asking you is he is probably correct, isn’t he?
  2. He is correct that that trading moved the market in the direction of the order and contributed to the order being triggered. In that he is correct. It could be that the motivation he ascribes to that trading is also correct. I would accept that.” [emphasis added]
  3. It would appear that ECU also makes a thinly veiled accusation of bias against Mr Moore because he had “come across or worked with” certain individuals (Closing submissions paragraph 80).
  4. Mr Moore noted in his report that he had known Mr Barnett when the latter worked at Citigroup around 1995 but he said that he had not seen him for more than 20 years. He said that:
“…he is not a friend of mine.  I didn’t particularly get on with him when we worked together…”
  1. Given the time elapsed and the circumstances of his past contact, I accept Mr Moore’s evidence that the fact that Mr Barnett had worked under him at Citigroup did not impact Mr Moore’s analysis of whether his conduct whilst at HSBC was acceptable. The fact that Mr Moore acknowledged he “came across” Mr O’Sullivan is an even flimsier basis to mount an attack on Mr Moore’s objectivity.
  2. In my view Mr Moore was very fair and measured in giving evidence – he accepted when he was able to agree and did not try to argue a case for one side or the other.
  3. For the reasons discussed above I reject any suggestion that Mr Moore’s evidence is not to be accepted on the basis of any lack of objectivity.
  1. There was some attempt for ECU to suggest that Mr Moore lacked relevant experience to assist the court because he had no experience of the design, implementation or analysis of trading systems. It was submitted for ECU (paragraph 73 of Closing Submissions) that Mr Gladwin’s approach was the “more analytical” and “more precise” because he had engaged in forensic data analysis during his time as a trader in a way that Mr Moore had not.
  2. I note Mr Moore’s experience as set out in his report was as follows: Mr Moore joined Citigroup in 1986 as a spot FX trader trading G10 currencies, became Spot Desk Head  in  1992, followed by UK FX Head in 1996 and Global Head of Foreign Exchange in 2001. He left Citigroup in 2008. In 2012 he joined Lloyds Banking Group where he was Head of Financial Markets from 2012 to 2017.
  3. I also note that Mr Moore was a Non-Executive Director of Electronic Broking Services (“EBS”) the leading electronic FX broker, from 2001 to 2006 and a Member of the FX Expert Working Group in 2014 and 2015 that contributed to the Fair and Effective Markets Review (“FEMR”) published in 2015.
  4. In my view Mr Moore’s experience of working in the FX markets made him an appropriate expert witness to assist the court on the questions posed to the experts and in particular to assist the court as to the inferences that could properly be drawn from the available data as to the trading carried out by HSBC in relation to the trades in issue.
Conclusion on expert evidence
  1. In cross examination it was put to Mr Moore that he was operating in a field of expertise where there is often room for a range of reasonable opinion between experts which he accepted was fair.
  2. Whilst I accept the proposition that there may be a range of reasonable opinion between experts, the court is looking to determine issues on the balance of probability and not on the basis of a possible outcome.  For the reasons set out above, I am not satisfied that Mr Gladwin was wholly objective in his approach and where the views of Mr Moore and Mr Gladwin differ on a particular trade or a particular issue in relation to such trade, I am inclined to prefer the evidence of Mr Moore. This does not mean that I accept the evidence of Mr Moore without qualification: as both experts accepted (and referred to below) there were shortcomings in the data and in some instances, Mr Moore had not considered the totality of the evidence in relation to the trade where there were relevant transcripts of phone calls and evidence in the Defendants’ witness statements. In reaching my conclusions I have considered the entirety of the evidence including the evidence of the factual witnesses and any contemporaneous documentary evidence as well as the evidence of the expert witnesses and the shortcomings in the evidence as discussed elsewhere.