CCO Claims He was Fired for Investigating and Reporting Wrongdoing
The Chief Compliance Officer of a broker-dealer has sued his former firm and its principals because he claims he was fired for investigating wrongdoing rather than the reasons cited on his Form U5. The plaintiff alleges defamation and tortious interference with economic advantage. The plaintiff asserts that he was fired because he investigated, and reported to FINRA, wrongdoing that he discovered while conducting email reviews. He also claims that the principals offered to “go easy” on him if he cooperated with them in ongoing litigation but filed the defamatory U5 after he refused.
OUR TAKE: It is noteworthy that the plaintiff did not allege wrongful termination as the New York State Court of Appeals has ruled that a CCO fired for performing his/her compliance function has no wrongful termination cause of action. (See http://blog2.cipperman.com/2012/05/nyss-highest-court-rules-that-compliance-officers-cant-sue-for-wrongful-termination/). Instead, the plaintiff claims defamation and interference with his chances of obtaining future employment.