Bloomberg Law®, an integrated legal research and business intelligence solution, combines trusted news and analysis with cutting-edge technology to provide legal professionals tools to be...
By Yin Wilczek
In a lawsuit under the financial reform statute's whistleblower anti-retaliation provisions, a trader Sept. 10 alleged that he was forced to resign shortly after he told his Wall Street employers that he had disclosed trading violations to the Securities and Exchange Commission (Nordgaard v. Weir , S.D.N.Y., No. 1:12-cv-06843-DLC, 9/10/12).
In his complaint, filed in the U.S. District Court for the Southern District of New York, plaintiff James Nordgaard said his career came to an “abrupt end” a month after he told his employers--Paradigm Capital Management Inc. and C.L. King & Associates Inc.--that he had reported to the SEC that the firms were engaging in what he believed to be illegal trading activities.
“Defendants forced Mr. Nordgaard off the trading desk, literally and figuratively isolated him, limited his communications with co-workers and his access to business systems, and made it impossible for him to resume his trading responsibilities,” the complaint said. “Defendants constructively terminated Mr. Nordgaard's employment by retaliating against him and creating an intolerable work environment.”
Nordgaard also named Candace King Weir in his lawsuit. Weir is the founder and president of Paradigm and C.L. King, which the complaint described as a “single integrated enterprise.”
Section 922(h) of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act allows whistleblowers who believe they have been suffered retaliation at the hands of their employers for reporting securities violations to sue the employers in federal court. However, although Section 922(h) has been available to whistleblowers since enactment of the financial reform legislation, there have been relatively few cases under the provision.
Nordgaard's counsel, Tammy Marzigliano, Outten & Golden LLP, New York, confirmed that her client's lawsuit is one of the first to be filed under Section 922(h). “I think it is important to note that before the Dodd-Frank Act, it was nearly impossible to obtain justice for a whistleblower employee who was retaliated against,” she said.
Given the lack of precedent, Nordgaard's lawsuit will touch on “uncharted” territory with respect to substantive issues, Marzigliano continued. “We are looking forward to litigating this case,” she told BNA.
Morgan Stanley, in a response filed Sept. 7, has denied the allegations. The firm maintains that Jagodzinski was fired because of “management dissatisfaction” with his performance “as a risk officer over a period of time.”
Meanwhile, such lawsuits generally have not fared well in the federal courts. For example, a client memorandum by Clifford Chance LLP referenced the April decision of Nollner v. Southern Baptist Convention Inc., which the law firm described as one of the first decisions to interpret Dodd-Frank's anti-retaliation provision. In that case, the U.S. District Court for the Middle District of Tennessee dismissed a whistleblower's anti-retaliation claim because his employer was not an issuer of securities.
Two months later, the U.S. District Court for the Southern District of Texas concluded that the anti-retaliation provision did not apply to a potential whistleblower in Jordan who allegedly was fired for reporting a possible Foreign Corrupt Practices Act violation: Asadi v. G.E. Energy (USA) LLC (131 SLD, 7/10/12).
In the meantime, legal experts predict that more whistleblower employer retaliation lawsuits are on the horizon.
“Putting aside the merits, I anticipate there may be more of these types of lawsuits in the future for at least two reasons,” said Bradley Bondi, a Washington-based partner at Cadwalader, Wickersham & Taft LLP, and former counsel to two SEC commissioners.
“First, the Dodd-Frank Act expanded the time period to file a discrimination claim,” Bondi said. “Second, with the possibility of obtaining a large cash bounty from the SEC through the SEC's whistleblower bounty program, whistleblowers are becoming more sophisticated about their legal rights, often with the assistance of counsel."
By Yin Wilczek
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)