The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Two Fido Whistleblowers Are Left Hanging Not Rated 5.0 Email Routing List Email & Route  Print Print
Monday, February 6, 2012

Two Fido Whistleblowers Are Left Hanging

News summary by MFWire's editors

Two former Fidelity Investments employees are finding out the hard way that a U.S. law protecting whistleblowers at publicly traded companies does not cover employees of mutual fund firms, Reuters reports.

According to the pub, the U.S. Court of Appeals for the 1st Circuit overturned a Boston federal judge's decision to apply the provisions of the Sarbanes-Oxley Act to private companies serving under contract as advisers to public companies. The ruling marks the first time an appeals court has weighed in on the issue.

In the Fidelity case, plaintiff Jackie Hosang Lawson, who worked at Fidelity from 1993 until 2007, reportedly complained she alerted supervisors to problems, including the alleged improper retention of $10 million of fees, only to be passed over for a promotion and threatened with punishment for insubordination.

The other plaintiff, Jonathan Zang, who PMed several mutual funds from 1998 to 2005, alleged Fidelity gave him poor reviews and fired him in retaliation for his complaint that a new pay plan for Fidelity portfolio managers inaccurately and illegally described how pay was calculated.

In its defense, Fidelity argued that Lawson and Zang worked for affiliates such as its Fidelity Management & Research arm, rather than a public company that Sarbanes-Oxley was meant to cover.

And the 1st Circuit sided with Fidelity, after analyzing the text of the statute and its legislative history, noting that other whistleblower statutes in the Energy Reorganization Act and the Pipeline Safety Improvement Act specifically extend coverage to contractors, unlike Sarbanes-Oxley.

"We are bound by what Congress has written," the court reportedly explained, adding that if Congress intended the term "employee" to have broader meaning, it could amend the statute.

For what its worth, Lawson and Zang reportedly had the backing of both the Securities and Exchange Commission (SEC) and the Department of Labor (DoL), which submitted briefs on appeal that supported the extension of whistleblower protections to mutual fund employees. But the 1st Circuit would hear none of it and reportedly refused to defer to the agencies' interpretation.

Paul Nemser, a lawyer for Fidelity, reportedly praised the opinion as "very thoughtful and definitive."

The Boston Globe also covered the case. 

Edited by: Hung Tran

Stay ahead of the news ... Sign up for our email alerts now

 Do You Recommend This Story?

Return to Top
 News Archives
2024: Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Add to My Yahoo!
follow us in feedly

©All rights reserved to InvestmentWires, Inc. 1997-2024
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use