BOSTON, June 22 (Reuters) - Fidelity Investments said on Friday it was waging a legal battle against a former employee who has accused the largest U.S. mutual fund firm of breaking laws aimed at catching terror groups trying to launder money.
According to court documents, David van Duyn, a lawyer who worked at Fidelity until May, 2006, accused a Fidelity executive of ordering him to avoid some of the USA Patriot Act’s requirements to monitor and report certain transactions to regulators.
Fidelity spokesman Vin Loporchio said Fidelity has denied the allegations.
Shortly after the Sept. 11, 2001 attacks on the United States, the Treasury Department asked all U.S. financial institutions to more closely monitor their clients’ financial transactions to make sure that terror groups were not using them to launder money.
Van Duyn, who worked as an anti-money laundering advisor in Fidelity’s Risk Oversight Enterprise Compliance unit for nearly two years, also charged in the documents that his former boss, Stephen Ganis, ordered him to falsify documents, according to the court papers that were filed in Suffolk Court in Boston.
Fidelity in turn sued van Duyn to prevent him from disclosing confidential information, saying van Duyn signed an employee agreement that contractually obligated him keep Fidelity’s information confidential.
Fidelity said van Duyn was fired because he falsified an e-mail about a regulatory compliance matter to hide that he had not followed through on a time-sensitive assignment, according to court papers.
Van Duyn did not immediately return a call seeking comment.
The Boston Business Journal first reported the legal dispute on Friday.
Van Duyn’s lawyer, who specializes in whistle-blower cases, said he could not comment on the matter.
Van Duyn has also filed his suit separately in another court in Massachusetts where it has been impounded, preventing anyone involved with it from discussing it.
Fidelity’s Loporchio said the privately-held company has extensive legal and regulatory compliance programs to meet its regulatory obligations. “We devote significant resources to our program and believe it has been very effective,” he said.
Many financial firms had to expand their compliance departments and invest in new technology so they could better track customer transactions and report any suspicious patterns to government agencies.
Fidelity, which invests $1.4 trillion, is one of the world’s biggest financial institutions offering services to roughly 23 million people.