A U.S. District Court judge in Boston ruled against Fidelity Investments
late Tuesday in a mutual fund related case, citing the provisions of the Sarbanes-Oxley Act of 2002.
Fidelity had tried to get the case dismissed, but Judge Douglas Woodlock denied the motion, saying Fidelity's reading of Sarbanes-Oxley "would result in an excessively forced and formulistic reading" of the law, according to Reuters
Fundsters may remember the plaintiff Jane Hosang Lawson
, a former senior director of finance for Fidelity, who blew the whistle on her employer when she told the Occupational Safety and Health Administration (OSHA) that Fidelity was improperly retaining $10 million fees and miscalculating fund profitability reports.
"There has been no determination of the merits of these claims," said Fidelity spokeswoman Anne Crowley in an emailed statement. "We believe these former employees' claims are without merit and we intend to defend against them vigorously."
Lawson filed a complaint with the Massachusetts District Court on March 20, 2009. The suit listed FMR Corp., FMR LLC and Fidelity Brokerage Services as defendants.
"This is a critical case because Sarbanes-Oxley was designed to protect investors," Lawson's lawyer Indire Talwani told Reuters. "Mutual funds are the major way that Americans invest their money."
A second plaintiff in the case, Jonathan Zang
, who managed a number of Fidelity funds between 1998 and 2005, originally filed a separate suit until his was combined with Lawson's. Zang said Fidelity gave him poor reviews and eventually dismissed him after he spoke-up about a new pay plan for portfolio managers which inaccurately and illegally described how pay was calculated.
"Fidelity has extensive legal and regulatory compliance programs designed to meet our regulatory obligations," Crowley said. "We offer our employees a number of channels through which to report potential issues related to the mutual funds and also with respect to any potential business ethical issues."
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