Fidelity Investments is asking a federal judge to dismiss a lawsuit filed by one of its former financial advisors who claimed he was fired for whistleblowing, Think Advisor reports.
Michael Maeker filed the suit in federal court in May, alleging that Fidelity violated state securities laws and the Securities and Exchange Commission’s Regulation Best Interest. He said evidence showed that from 2019 to 2023, Fidelity prompted branch managers and advisors with compensation incentives and threats to their career if they did not move clients into higher-revenue generating investments that may have been unsuitable for the clients but made more money for the company. According to the suit, managers instructed advisors to guide large accounts to use so-called “Tier 3” investments, which were managed accounts that would produce more revenue for Fidelity than passive funds or self-directed options.
Maeker, who was with Fidelity for 24 years, claimed he was fired in December 2022 in retaliation for his internal reporting of these practices, which he said violated the company’s fiduciary responsibility to its clients. He alleged that the firing cost him millions in lost earnings, along with emotional distress and reputational harm.
In its response, filed in the U.S. District Court for the Northern District of Texas, Fidelity denied Maeker’s allegations and his contention that he was fired for whistleblowing. Instead, the firm said it decided to remove Maeker from his role as a financial advisor “after a thorough and impartial internal investigation revealed that he had repeatedly engaged in deceptive misconduct that put Fidelity’s clients at risk in order to make it appear—falsely—as though he was conducting financial planning with Fidelity’s clients, the job he was paid hundreds of thousands of dollars a year to do.”
Specifically, Fidelity said its investigative team determined that Maeker sent financial planning reports to his assigned clients without confirming with them the accuracy of information underpinning those reports. Among other things, those reports told Fidelity’s clients whether they were on track financially to support themselves in retirement in light of their expected retirement date, expenses, income, and total assets, all of which can change. Maeker’s behavior was deceptive and it was done to inflate his performance, the company said. He also filed his internal complaint days after his manager asked him to return to in-person office work, Fidelity alleged.
In a previous response, a Fidelity spokesperson said “Mr. Maeker’s complaint was already reviewed and dismissed by an [Occupational & Safety Health Administration] investigator who concluded, among other things, that Mr. Maeker would have been removed from his role due to his misconduct regardless of his purported whistleblowing activity. In other words, Fidelity did not retaliate against him.”
In addition to his claims that Fidelity violated securities laws and Reg BI, Maeker also said the firing violated the Sarbanes-Oxley Act’s anti-retaliation and whistleblower protections. Fidelity asserts that the whistleblower protections of Sarbanes-Oxley are not applicable in his case since Fidelity is a private company.
Hyman Cotter PC routinely represents investors harmed when financial professionals and their firms engaged in misconduct that caused their clients investment losses. If you think your financial professional or firm engaged in misconduct that caused investment losses, contact the Chicago investor fraud attorneys of Hyman Cotter PC to schedule a free consultation by calling 312-291-4600 or through our online contact form.
