The U.S. Supreme Court has agreed to hear a case involving the Sarbanes-Oxley (SOX) corporate reform legislation, specifically relating to the rights of whistle-blowers. The case involves two whistle-blowers within FMR, an investment advisor affiliated with mutual fund company Fidelity.
Jackie Hosang Lawson complained to Fidelity’s lawyers that expenses for a certain fund were overstated and amounted to fraud against shareholders of the fund. She contends she was intimidated for doing so, and after complaining to the Securities and Exchange Commission and withstanding more harassment, she resigned in 2007, court papers say. Jonathan Zang, a former Fidelity research analyst, alleged he was terminated because he raised concerns about the accuracy of a draft registration statement for certain Fidelity funds, the Wall Street Journal reported.
Fidelity Investments said the two former employees weren’t eligible to bring whistle-blower claims under SOX because they weren’t employees of a public traded company, but a contractor of the public company.
The appeal states that although there is specific contractor language in SOX it means to bar a contractor from retaliating against the public company’s employees. The Court of Appeals panel split on the issue, but ordered the dismissal and then refused to rehear it, setting up the Supreme Court appeal. The court will consider the cases during its next term, which begins in October.