BOSTON (Reuters) - A U.S. jury on Tuesday sided with Fidelity Investments in rejecting a claim the mutual funds company retaliated against a former employee after she complained that it potentially defrauded investors by incorrectly calculating expenses.
Jackie Lawson, a former senior director of finance at Fidelity who resigned in 2007, sued the mutual funds company in Boston federal court in 2008 claiming it had violated laws intended to protect whistleblowers by retaliating against her.
The jury found that Lawson failed to prove that she had either a subjective or objective belief that Fidelity had been engaged in conduct that violated federal securities laws.
At trial, Boston-based Fidelity said Lawson’s complaints were baseless, came only after she was passed over for a job she wanted and involved routine errors that Fidelity sought to fix. Lawson had been seeking millions of dollars in damages.
The trial came after the U.S. Supreme Court in 2014 revived Lawson’s lawsuit and expanded who was protected by the whistleblower protections of Sarbanes-Oxley Act, which was enacted in 2002 after the accounting scandal at Enron Corp.
Following the verdict, Lawson said that she respected the jury system.
“It’s been a long 10 years to get my day in court, and for that I am grateful,” she said.
Fidelity spokesman Vincent Loporchio in a statement said the company was “very happy about the jury’s decision today.”
“The jury found, as Fidelity has stated all along, that no reasonable person could believe that Fidelity violated the law protecting mutual fund shareholders from fraud,” he added.
At trial, Lawson’s lawyers said she was subjected to a campaign of retaliation that prompted her resignation after she raised concerns about how Fidelity accounted for tens of millions of dollars in expenses incurred managing mutual funds.
Her lawyers argued that said by inflating its expenses, Fidelity, which manages about $2.3 trillion in assets, could potentially boost its fees.
Robert Friedman, her lawyer, told jurors that in response to raising those concerns, Lawson suffered a reduction in compensation and “unrestrained harsh treatment” aimed at making it harder for her to do her job, leading to her resignation.
She brought her concerns to her managers, Fidelity’s general counsel and the U.S. Securities and Exchange Commission, her lawyers said. She also filed a complaint about the retaliation with the U.S. Occupational Safety and Health Administration.
The SEC closed an investigation into Lawson’s claims in 2012, according to court papers.
The case is Lawson v. FMR LLC, et al, U.S. District Court, District of Massachusetts, No. 08-10466.
Reporting by Nate Raymond in Boston; editing by Richard Chang and Diane Craft