Fidelity Investments said yesterday it was waging a legal battle against a former employee who has accused the largest US mutual fund firm of breaking laws aimed at catching terror groups trying to launder money.
According to court documents, David van Duyn, a lawyer who worked at Fidelity until May 2006, accused a Fidelity executive of ordering him to avoid USA Patriot Act requirements to monitor and report transactions to regulators.
Fidelity spokesman Vin Loporchio said Fidelity has denied the allegations.
Shortly after the Sept. 11, 2001 attacks on the United States, the Treasury Department asked all US financial institutions to more closely monitor their clients' financial transactions to make sure that terror groups were not using them to launder money.
Van Duyn, who worked as an antimoney-laundering adviser in Fidelity's Risk Oversight Enterprise Compliance unit for nearly two years, also charged in the documents that his former boss, Stephen Ganis, ordered him to falsify documents, according to papers filed in Suffolk Court .
Fidelity in turn sued van Duyn to prevent him from disclosing confidential information, saying van Duyn signed an agreement that obligated him keep Fidelity's information confidential.
Fidelity said van Duyn was fired because he falsified an e-mail about a regulatory compliance matter , according to court papers.
Van Duyn did not immediately return a call seeking comment.
Van Duyn's lawyer, who specializes in whistle-blower cases, said he could not comment on the matter. Van Duyn has also filed his suit separately in another court in Massachusetts where it has been impounded, preventing anyone involved from discussing it.
Loporchio said the privately held company has extensive legal and regulatory compliance programs to meet its regulatory obligations .
Many financial firms had to expand their compliance departments and invest in new technology to better track transactions and report any suspicious patterns to government agencies.
(Omission: A story in Saturday's Business section about a former Fidelity Investments lawyer suing the mutual fund firm failed to credit the publication that first broke the news. The Boston Business Journal reported the lawsuit on Friday.)