Hedge fund consultant's firing not retaliation, court rules

3 minute read

People exit the headquarters of the U.S. Securities and Exchange Commission (SEC) in Washington, D.C., U.S., May 12, 2021. Picture taken May 12, 2021. REUTERS/Andrew Kelly

Register now for FREE unlimited access to Reuters.com
  • Autonomy Capital worker claimed he was fired after raising cybersecurity issues
  • Was not 'whistleblower' under previous SEC rule

(Reuters) - A federal judge in Manhattan dismissed a whistleblower retaliation lawsuit by a former IT worker at Autonomy Capital, saying he was not eligible for protection under rules that the U.S. Securities and Exchange Commission subsequently changed.

U.S. District Judge Gregory Woods said on Wednesday that whistleblower rules the SEC created under the Dodd-Frank Act had only protected those who reported concerns to the agency in writing and did not cover a 2019 phone call flagging Nicholas Moniodes' concerns about potential data security violations.

The rule was amended last year to make it easier to qualify as a whistleblower, the judge noted.

Register now for FREE unlimited access to Reuters.com

Lawrence Pearson of Wigdor, an attorney for Moniodes, said after the ruling that the U.S. whistleblower law is full of "blind spots."

"It is clear that Congress and the SEC must work to expand protections for employees who raise compliance issues and legal violations to the government, as well as within companies," he said.

Moniodes, who worked at Autonomy from 2014 to 2020, sued his former employer last year, claiming he was fired in retaliation for raising concerns about the firm's data protection practices.

He argued that he qualified as a whistleblower under the U.S. Supreme Court's 2018 ruling in Digital Realty Trust Inc, which said Dodd-Frank protects those who flag issues to the SEC rather than those who report concerns internally.

On Wednesday, Woods agreed with Autonomy's argument that the reasoning in Digital Reality meant that whistleblowers were only those who reported concerns via the methods specified in SEC rules, which required written reporting online or by fax.

The case is Moniodes v. Autonomy Capital (Jersey) LP et al., U.S. District Court, Southern District of New York, No. 20-CV-05648.

For Moniodes: Lawrence Pearson and Renan Varghese of Wigdor

For Autonomy: Tariq Mundiya and Jeffrey Korn of Willkie Farr & Gallagher

(NOTE: This story has been updated with comment from Moniodes' attorney.)

Read More:

U.S. top court declines to broaden whistleblower protections

Register now for FREE unlimited access to Reuters.com

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Jody Godoy reports on banking and securities law. Reach her at jody.godoy@thomsonreuters.com