An investment management firm, along with its affiliate, has filed a claim against its former chief financial officer (CFO), who unwittingly disclosed the firm’s online banking security details to a fraudulent caller, enabling illegitimate transfers from the firm’s bank accounts.  The investment management firm claims that the CFO acted negligently and in breach of his contractual, tortious and fiduciary duties in failing to protect assets in corporate bank accounts.  The CFO, who believed he was providing security details to a member of the anti-fraud team of the investment manager’s private bank, denies failing to uphold the required standard of care, asserting that he was acting honestly, in what he reasonably and genuinely believed to be the best interests of his employer.  This article examines the allegations in the claim, as well as the rebuttals raised by the CFO in his defense.  In addition, the claim raises a number of questions and brings to the fore various issues of relevance to hedge fund managers and their staff, which are discussed in this article.  For another case where employees of a hedge fund manager were held liable for fraudulent actions, see “U.K. Appellate Court Holds That Hedge Fund Manager Employees May Be Personally Liable for Unreasonably Relying on the Representations of a Hedge Fund Manager Principal Regarding Performance and Portfolio Composition,” Hedge Fund Law Report, Vol. 6, No. 9 (Feb. 28, 2013).