In Abramov v. Capula Investment US LP, 2026 WL 3084852 (N.Y. Sup. Ct. N.Y. Cty. Oct. 1, 2026), the court denied defendants’ motion to dismiss plaintiff’s whistleblower retaliation claim asserted under New York Labor Law § 740. Defendant moved to dismiss the complaint on the ground that “prosecuting the whistleblower claim necessarily will require Abramov to reveal confidential client information in violation of applicable attorney ethics rules.”
The court disagreed:
The Complaint’s central allegations support a reasonable inference that Abramov identified compliance concerns regarding the PTE structure of the MS Fund, cross-trading issues, and test trades, reported those concerns to senior management, and suffered retaliation for doing so. Abramov thus sufficiently alleges that the allegations in his complaint arise from his compliance role rather than his role as in-house counsel.
In response, Capula argues that it makes no difference whether Plaintiff was acting in a compliance role or a legal role when he obtained the confidential information on which his claim is based. In support of this admittedly broad holding, Capula relies on Johnson v MediSys Health Network (2011 WL 5222917 [EDNY June 1, 2011]. In that case, the court recognized that “[a]s General Counsel and Corporate Compliance Officer, the plaintiff acted as both an attorney and as a member of management”, but held that that it did not matter whether an in-house counsel obtained confidential information in a legal or business capacity because the “critical issue” is that the attorney later sought to use the confidential information to the client’s disadvantage.
While the confidentiality concerns expressed in Johnson are legitimate, the Court respectfully declines to apply them to preclude Abramov’s statutory whistleblower claim under New York law. Under Defendants’ proposed rule, a standard confidentiality agreement would be sufficient to broadly foreclose whistleblowing by a compliance officer/in-house counsel. Moreover, companies could largely foreclose protected disclosures by their compliance officers simply by choosing to hire only lawyers for those roles. In sum, categorically denying statutory whistleblower remedies to attorneys who serve as compliance officers could substantially undermine the effectiveness of the statutory regime.
(Cleaned up.)
The court did, however, recognize “the importance of preserving client confidences and does not suggest that a lawyer should be free to reveal such confidences absent an extraordinary justification” and held “that the legislature’s clear policy favoring robust whistleblower protections weighs against imposing a per se rule requiring summary dismissal of a statutory whistleblower retaliation claim simply because the plaintiff is an attorney.”