On October 1, 2026, Justice Cohen of the New York County Commercial Division issued a decision in Abramov v. Capula Inv. US LP, 2026 NY Slip Op. 26184, holding that a lawyer can be a whistleblower under the New York whistleblowing statute, explaining:
To state a viable claim under NYLL § 740, a plaintiff must plausibly allege (1) a protected activity, (2) a retaliatory action, and (3) a causal connection between the two.
Abramov has adequately pleaded that he was reporting or objecting to conduct that he reasonably believed was unlawful. For instance, he alleges that he objected to and raised concerns regarding expense allocation and disclosure practices, noting that these were compliance concerns. Abramov also communicated his concerns that cross-trading practices created significant conflicts of interest and potential regulatory exposure to his superiors. Capula argues that mere allegations of risks” or potential violations are insufficient to plead a NYLL § 740 claim. However, affording Abramov every possible favorable inference at this stage, it is reasonable to interpret those allegations as describing practices that Abramov reasonably believed were unlawful. Defendants concede that Abramov has adequately pleaded the other two prongs of his cause of action, though they deny the allegations.
In sum, Capula does not seriously question the adequacy of the pleading on its face. Instead, it argues that the complaint should be dismissed because virtually every substantive allegation in the complaint is derived from confidential information that Abramov is prohibited from disclosing under New York’s Rules of Professional Conduct, 22 NYCRR 1200.0. Specifically, Capula argues that RPC 1.6(a) and 1.9(c) prohibit Abramov’s disclosure of the information underlying the allegations of the complaint. In particular, confidential information includes client information (1) that is protected by the attorney-client privilege, (2) that would be embarrassing or detrimental to the client if disclosed, or (3) that the client has requested to be kept confidential.
Capula primarily relies on Wise v Consol. Edison Co. of NY (282 AD2d 335 [1st Dept 2001]) for the broad proposition that a termination-related claim asserted by an in-house counsel against a former employer must be dismissed if permitting the action to proceed would “entail the improper disclosure” of confidential information. In Wise, the First Department dismissed a claim grounded in a common law theory of wrongful discharge brought by an in-house counsel against his former employer, reasoning that permitting the action to go forward would entail the improper disclosure of client confidences. Though Wise remains binding precedent (albeit applying a prior iteration of the applicable ethics rules, New York’s Code of Professional Responsibility), the instant case is distinguishable in at least two key respects.
First, unlike the plaintiff in Wise, Abramov alleges that he was unlawfully terminated for engaging in statutorily protected whistleblower conduct pursuant to NYLL § 740. Recent amendments to NYLL § 740 significantly expand the range of protected activity under the statute and confirm a clear legislative policy favoring robust protections for whistleblowers. By contrast, Wise involved a common law claim and thus did not involve a balancing of the in-house lawyer’s general ethical obligations and a robust legislative policy choice to protect corporate whistleblowers with a bespoke cause of action.
Second, Abramov alleges that the complaint’s substantive allegations arise from his chief compliance officer role, not his in-house counsel role. Compliance officers—especially those who work for heavily-regulated entities like Capula—perform vital management functions to prevent corporate wrongdoing and ensure that these entities comply with a panoply of regulations. While compliance officers may be lawyers, they need not be. As employees under NYLL § 740, compliance officers are entitled to the whistleblower protections that plaintiff relies on in his complaint (see NYLL § 740 [1] [a] [defining an “employee”]).
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] [Pohorelsky, Magistrate Judge], report and recommendation adopted as mod, 2011 WL 4101323 [EDNY Sept. 8, 2011]). In that case, the court recognized that as 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.
To be sure, the Court recognizes the importance of preserving client confidences and does not suggest that a lawyer should be free to reveal such confidences absent an extraordinary justification. As this case progresses, the Court may rule that certain communications and testimony are inadmissible and may also entertain appropriate sealing motions to address legitimate confidentiality concerns. However, the Court finds 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.
(Internal quotations and citations omitted).