Looks like Fred Alger Management [profile] is still in the legal hot seat. Reuters reports today that the New York fund firm failed to get a whistleblower lawsuit by a former PM dismissed in court.

Alger had attempted to dismiss the lawsuit on the grounds that Ott had "contrived a controversy." But U.S. District Judge Loretta Preska ruled in favor of Rosanne Ott, who ran the Alger Health Sciences fund from 2005 until January 2011 when she was fired. But Preska also dismissed several of Ott's claims.

Ott, also a former U.S. Army Black Hawk helicopter pilot, alleged that Alger instituted a policy in April 2010 applying only to its Ott's fund, allowing other Alger PMs to trade ahead of her fund. When Ott filed a formal complaint with the SEC on Sept. 7, 2010, she was subjected to harassment, replaced as head of Alger's heath care group, and also saw her bonus reduced by 92 percent.

Ott's subsequent lawsuit, filed in June 2011, is one of the first to emerge after 2010 Dodd-Frank financial reforms banned companies from retaliating against whistleblowers. While Preska dismissed nine of Ott's 10 claims — including claims over bonuses and an alleged failure to pay deferred compensation that had not yet vested at the time Ott was fired — she said there was enough evidence that Ott reasonably believed the trading policy was illegal, and that her complaints led to her firing.

 

Edited by: Irene Park


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