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Ahmad v. Morgan Stanley & Co., Inc.

United States District Court, S.D. New York

February 21, 2014

SAEED AHMAD, Plaintiff,

For Saeed Ahmad, Plaintiff: Jacob Aronauer, New York, NY; John Balestriere, Balestriere, Fariello & Abrams LLP, New York, NY.

For Morgan Stanley & Co., Inc., Defendant: Andrew Jay Schaffran, LEAD ATTORNEY, Amanda Nicole Slatin, Morgan, Lewis & Bockius LLP (New York), New York, NY.


Page 492


Paul A. Engelmayer, United State District Judge.

Saeed Ahmad, a former auditor at Morgan Stanley & Co., Inc. (" Morgan Stanley" ), alleges that Morgan Stanley retaliated against him, in violation of the whistleblower protection provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (" Dodd-Frank" ), 15 U.S.C. § 78u-6(h). Such retaliation was, allegedly, a response to Ahmad's reports to supervisors and certain government agencies of alleged deficiencies in Morgan Stanley's lending practices. Morgan Stanley moves to dismiss, primarily on the grounds that all adequately pled acts of retaliation occurred before Dodd-Frank's effective date (July 22, 2010), and that Dodd-Frank's whistleblower protection provision is not retroactive. For the reasons that follow, the Court grants the motion to dismiss.

I. Background[1]

Because the Court holds that Dodd-Frank's whistleblower protection provision is not retroactive, the Court divides its recitation of the facts between those occurring (1) before Dodd-Frank became effective on July 22, 2010, and (2) after that date.

A. Alleged Protected Activity and Retaliation Before July 22, 2010

Ahmad began working for Morgan Stanley as a credit audit specialist in 2006.

Page 493

Am. Compl. ¶ 13. In September 2006, Ahmad began his first audit of loans made by the Credit Department. Id. ¶ 18. During that audit, from November 2006 to March 2007, Ahmad informed his supervisors of a number of problems with the audited loans. Id. ¶ ¶ 18-24.

Ahmad alleges that he was met with retaliation. On March 20, 2007, at the audit closeout meeting, Jon LaMountain, co-head of the Credit Department, cursed and yelled at Ahmad, calling Ahmad's analysis " bullshit." Id. ¶ 25. Ahmad was unable to respond because LaMountain continued to curse and yell at him. Id. In March and April 2007, Gerry Rieger, the Managing Director of the Audit Department, white-washed Ahmad's report and directed Ahmad to make certain whitewashing changes himself. Id. ¶ ¶ 28-33. In April 2007, a Mr. Hawxhurst, Vice President of the Audit Department, prohibited Ahmad from communicating with Credit Department staff during his audit. Id. ¶ 36. In October 2007, Hawxhurst pressured Ahmad to issue an incomplete report. Id. ¶ ¶ 37-40.

In December 2007, Ahmad began his second audit. Id. ¶ 41. Hawxhurst forbade Ahmad from asking questions at two preliminary audit meetings. Id. ¶ ¶ 43-44. When Hawxhurst saw that Ahmad had identified problems with a certain loan, he yelled at Ahmad for spending too much time on that issue. Id. ¶ 47. In June 2008, Ahmad submitted the audit report. Id. ¶ 49. That week, Doug Lyons, head of Credit-London, called Ahmad to criticize the report and inform Ahmad that he would inform managing director Rieger of his disapproval. Id. Rieger and Hawxhurst then prevented Ahmad from attending the audit closeout meeting, removed most of the report's discussions of problematic loans, and changed the report's rating of the audited loans to " Satisfactory." Id. ¶ ¶ 51-52.

In July 2008, Ahmad began his third audit, in which he raised similar concerns as before. Id. ¶ 54. Madhu Panchagnula, an Executive Director in the Audit Department, re-wrote Ahmad's report to tone down the concerns it raised and to give a " Satisfactory" rating to the audited loans. Id. ¶ 55. On November 19, 2008, Panchagnula issued the report. Id.

On December 10, 2008, Ahmad sent an anonymous memo regarding his audit findings and the harassment he had experienced, first, to the former CEO of Morgan Stanley, John Mack, and then, later, to Morgan Stanley's current Chairman and CEO, Dennis Lynch.[2] Id. ¶ 56. In response, Morgan Stanley represented that it was conducting an internal investigation. Id. ¶ 57. On January 23, 2009, Ahmad attended his first meeting regarding this investigation. Id. ¶ 58.

On March 13, 2009, Morgan Stanley ordered Ahmad to take an administrative leave of absence. Id. ¶ 60. In August 2009, Ahmad returned from this leave. Id. ¶ 61. Also that month, Morgan Stanley appears to have concluded its investigation. Id. ¶ 59. Ahmad alleges that, upon his return, Morgan Stanley continued to harass and retaliate against him. Id. ¶ 62.

Ahmad alleges that Morgan Stanley further retaliated against him by lowering his compensation every year, denying him a bonus in ...

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