By Nell Mackenzie

LONDON (Reuters) -A former senior employee is suing the hedge fund he worked for, claiming bullying and unfair dismissal, in a case that is being heard by a London employment tribunal.

Jacopo Moretti is seeking damages from DL and Partners, its star manager Davide Leone, and four other directors of the hedge fund, which once oversaw as much as $1.5 billion.

Moretti, a co-founder and former director at the hedge fund, alleges he was unfairly dismissed and that he was the victim of verbal abuse, harassment and antisemitism, according to court documents. He also claims that reasonable adjustments were not made for a disability linked to his mental health.

Leone, the hedge fund and the four other directors deny the claims. A representative for them told Reuters: "The action is based on totally false allegations and his (Moretti's) claims are completely groundless."

A representative for Moretti said he was subjected to years of systematic verbal and psychological abuse, gaslighting and discrimination, and had been diagnosed with a disabling psychiatric injury. DL and Partners acknowledged Moretti's status as disabled in May 2023, court documents show.

The tribunal will also decide whether disclosures Moretti made directly to Leone and to others at the firm, including the hedge fund's chief lawyer, are covered by whistleblower protections. These disclosures were about the firm's working environment and how it had affected Moretti's health.

Britain's Financial Conduct Authority is due to set out in June how it will tackle non-financial misconduct in the industry. The FCA declined to offer an update on the new regulatory changes or comment on the case.

The size of damages being sought by Moretti and whether this will include lost earnings will depend on the tribunal judge's decision on each claim. Moretti's earnings from DL and Partners averaged around $2 million a year, court documents show.

Unusually, the tribunal has admitted evidence presented by Moretti that includes over 60 hours of covert recordings. Witness statements from DL and Partners and Leone said these recordings were unauthorised.

Moretti, who in 2023 received a diagnosis of Post Traumatic Stress Disorder while he was off work, claims he felt threatened by Leone on a number of occasions, the court documents show.

In them, Leone is quoted as saying that it would be "very cheap to hire a murderer" and telling Moretti how much an assassin would cost.

The defence's response says these remarks were part of a "light-hearted" conversation and taken out of context, and that "in the hedge fund industry, robust exchanges are to be expected".

Leone's legal papers describe Moretti's claims of harassment as confused and false, and point to $86 million in investment losses attributed to him from 2021 and into 2022. From this point, Moretti began gathering evidence for a legal case, their documents say.

Moretti's representative said his client's investment recommendations were not followed and that he was not responsible for the losses.

He also pointed to Moretti's legal filings which describe long working hours and little time off and said Moretti raised repeated "whistleblower" concerns about Leone's behaviours and their impact on his health.

Moretti went on leave from the hedge fund from April 2022. The court documents show DL and Partners terminated his employment contract in June 2023. The hedge fund had rejected a grievance raised by Moretti after hiring a law firm to investigate it.

The employment tribunal case started in parallel to a High Court case which Moretti brought against the hedge fund and its founder last year. That case has been paused until the tribunal is finished, the documents show.

Witness statements for Leone and Moretti point to another tribunal arbitration where Moretti argued he was a shareholding partner in the fund. This was dismissed in August 2024 with Moretti paying costs.

The case continues.

(Additional reporting by Sinead Cruise; Editing by Dhara Ranasinghe, Elisa Martinuzzi and Catherine Evans)