U.S. District Judge Gregory Woods in Manhattan said Daniel Berman, who was a finance director at WPP's Neo@Ogilvy LLC unit, did not qualify for whistleblower protections under the 2010 Dodd-Frank financial reforms because he did not report his concerns to the U.S. Securities and Exchange Commission before the retaliation.

The decision, made public on Friday, exacerbates a split among federal courts about the reach of the whistleblower protections. It overruled an Aug. 15 recommendation by U.S. Magistrate Judge Sarah Netburn to let the case continue.

"Whistleblowers are vulnerable," said Jordan Thomas, a former SEC lawyer who chairs the whistleblower practice at the law firm Labaton Sucharow. "Whistleblowers shouldn't have to make these sorts of decisions without being fully informed of the state of the law, and the state of the law is unsettled."

Lawyers for Berman and Neo did not immediately respond to requests for comment.

Berman said he was fired in April 2013 after he uncovered suspect transactions involving delayed payments to media companies, improperly recognized revenue, "reversed" accounting reserves, and lenient payment terms for favoured clients.

He sued under Dodd-Frank, which created a private cause of action for whistleblowers whose employers retaliate against them for lawfully providing information to the SEC, or making disclosures protected under the Sarbanes-Oxley governance law.

Woods said various U.S. District judges, including one in Manhattan, have recognized a "narrow" exception letting people sue under Dodd-Frank without first going to the SEC, noting that SEC regulations adopted in 2011 could support that view.

But he said the 5th U.S. Circuit Court of Appeals in New Orleans offered a better view, ruling in 2013 that Dodd-Frank's "plain language" required people to first tell the SEC about alleged securities law violations before suing employers.

"The court does not question the value or importance of protecting whistleblowers from retaliation," but the Fifth Circuit approach "is more appropriate than the judicial creation of a 'narrow exception' to an unambiguous text," Woods wrote.

The case is Berman v Neo@Ogilvy LLC et al, U.S. District Court, Southern District of New York, No. 14-00523.

(Reporting by Jonathan Stempel in New York and Sarah N. Lynch in Washington, D.C.; Editing by Leslie Adler)

By Jonathan Stempel and Sarah N. Lynch