In Case of First Impression, U.S. District Court Interprets Private Right of Action Under Whistleblower Provisions of Dodd-Frank Act, Limiting Claims of Dismissed Employee of Hedge Fund Technology Vendor

From August 2003 through August 2010, plaintiff Patrick Egan (Egan) was employed as a sales executive by TradingScreen, Inc. (TradingScreen), a company that sells online trading software to hedge funds and other investors.  In 2009, Egan learned that TradingScreen’s chief executive officer, defendant Philippe Buhannic (Buhannic), was diverting business from TradingScreen to two competing businesses that Buhannic controlled.  Egan reported his discovery to TradingScreen’s president who, in turn, alerted the company’s independent directors.  An internal investigation confirmed Egan’s suspicions, but Buhannic managed to outmaneuver the independent directors, gained control of TradingScreen’s board of directors and fired both Egan and the company president.  Egan sued TradingScreen, Buhannic and Buhannic’s competing entities, seeking relief under the whistleblower provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Securities Exchange Act Section 10(b)(5).  He also asserted various state law claims.  The defendants moved to dismiss the entire complaint.  We summarize the Court’s decision.

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