Hiring misstep? How to act fast and protect your firm

Mike Clyne
Feb 2
2 min read

In the first of our series of hypothetical HR dilemmas for financial firms, we explore what to do if you discover something about one of your traders that creates legal or reputational risk for your business.

Imagine the scenario:

You are the COO of a hedge fund. You have just found out that one of your traders was fired from a previous role for trading irregularities. What should you do?

Immediate actions:

All situations are different, of course, but you may choose to keep the individual out of the office pending your investigation, while suspending any system access they hold.

Call us at FeMan Consulting for help at this early stage.

Next considerations: Investigate:

Look into the information the employee gave you when you hired them. See what they were asked and whether they answered fully or failed to disclose relevant information.
Take time to assess the potential impact on your business before you decide on the next course of action. You might feel panicked or angry, but emotion can often make a challenging situation even more so. Try to remain structured in your approach.
Be sure to review contracts, employment law obligations and regulatory requirements to make sure you have full awareness of any gaps, both now and for the future.

Communicate:

Keep your communication about this matter factual and neutral – both for the employee in question and any other team members affected.
Explain that you are reviewing new information and following due process.
If clients must be informed, keep it similarly factual and minimal: ‘We are reviewing a personnel matter to ensure continuing compliance with regulations.’

Document:

Keep detailed records of all your findings, communications and decisions.

"Situations like this can range from the relatively benign to the calamitous. Deciding where your example lands is critical and handling these issues properly after considering ALL the facts is crucial not only to protecting your business but also avoiding a future employee relations issue. With 36+ years of HR experience, I’ve seen these types of situations many times and will always advocate the calm and considered approach!"

- Mike Clyne, FeMan Consulting.

Prevent this from happening to you

In regulated industries it is essential to carry out thorough pre-employment background screening, which includes the verification of employer references. Always ask candidates the explicit question: ‘Have you ever been dismissed from previous employment? And, if so, why?’

Better still, bring in FeMan Consulting to manage every aspect of your firm’s HR process. Founded in 2005, we offer both HR consulting and background screening to businesses many of which have no in-house resource. With FeMan Consulting as your trusted partner, you can focus on running your business, confident that your hiring practices are robust and compliant.