Tuesday, 30 September 2014
Last updated 4 hours ago
May 9 2012 | 9:29am ET
New York State's highest court has ruled that Peconic Partners' former chief compliance officer can't sue the hedge fund for firing him—even though he alleges he was fired for confronting the firm's CEO about the latter's allegedly illegal trading.
The Court of Appeals ruled yesterday that to allow Joseph Sullivan to sue for wrongful termination would make New York law "more intrusive" than federal law, something the court was unwilling to do. So it rejected Sullivan's appeal of a lower court decision to toss the lawsuit.
"Nothing in federal law persuades us that we should change our own law to create a remedy where Congress did not," the ruling, approved by five of the seven judges on the appeals panel, wrote.
Sullivan claims he was fired after questioning CEO William Harnish's trading. Sullivan alleges that Harnish engaged in front-running of Potash Corp. shares, selling his own stake in the fertilizer company day before dumping the hedge fund's stake for much less.
Sullivan's claims for breach-of-contract and defamation remain active, as is Peconic's countersuit against Sullivan.
Despite Sullivan's lawyer's argument that his client was "fired for doing the job he was hired to do," the Court of Appeals noted that he was not just its compliance chief, but held four other titles. In addition, it ruled that he was not covered by laws protecting whistleblowers, since he had confronted Harnish directly about the alleged front-running, rather than bringing it to the proper authorities.
"We are delighted with the court of appeals’ decision to affirm the unanimous decision of the Appellate Division and to put an end to Mr. Sullivan’s smear campaign against his former employer,” David Scharf, the Peconic CEO's lawyer, said. “Mr. Sullivan’s claims are entirely baseless."
The decision was not without controversy. Two judges dissented, with one, the court's chief judge, Jonathan Lippman, writing that ruling "an investment adviser like Peconic has every right to fire its compliance officer, simply for doing his job, flies in the face of what we have learned from the Madoff debacle, runs counter to the letter and spirit of this Court's precedent, and facilitates the perpetration of frauds on the public."
For his part, Sullivan's lawyer, David Felber, said he would lobby the state legislature to provide protections for compliance officers like his client.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...