By Andrew Welsch
Fidelity Investments and a former financial advisor, who accused the company of improperly firing him for raising concerns about pressure to put clients in high-fee investment products that generated more revenue for Fidelity, have agreed to end their legal dispute.
Fidelity and Michael Maeker jointly agreed this month to dismiss his case, according to court documents. A representative for Fidelity and Maeker's attorney, Rogge Dunn, both said in separate statements that "the parties resolved their differences."
Fidelity is one of the nation's largest asset and wealth management companies, and serves tens of millions of retail investors. The company had more than $15 trillion in assets as of Sept. 30.
Maeker had worked for Fidelity in Dallas and was registered with the company from 1998 to 2022, according to BrokerCheck, a database maintained by industry self-regulatory organization Finra.
Fidelity terminated him in December 2022 for allegedly misrepresenting interactions with clients and improperly using planning tools, according to a note contained on his BrokerCheck record. Maeker disputed the allegations. He has no client complaints listed on BrokerCheck and his job performance and annual review records at Fidelity were "spotless," according to his lawsuit.
The suit, filed in May this year in a federal court in Texas, accused Fidelity of terminating him because of concerns he raised about pressures he and other advisors were under to put clients in high-fee investment products.
His lawsuit said that his branch manager "continuously pressured Maeker to push clients into unsuitable or ill-advised, high-fee generating financial investments that would make Fidelity more money -- regardless of investors' best interest."
The company allegedly categorized investments into three tiers based on how high the fees were for each investment; it then compensated advisors based on how many client assets they put into the high-fee tier, according to the lawsuit.
Marker's lawsuit says he raised concerns about violations of Securities and Exchange regulations through appropriate channels to various individuals at Fidelity. "Rather than disciplining the executives and managers who violated Reg BI (and other securities laws and regulations), Fidelity retaliated against and terminated Maeker's employment to send a message to its FAs to keep quiet," the lawsuit says.
Fidelity denied the allegations. In a legal response in court, the company says it determined that Maeker had "sent financial planning reports to his assigned clients without confirming with them the accuracy of information underpinning those reports." It said that Maeker's Dallas branch manager had encouraged him to engage more deeply with clients and their financial planning needs to no avail.
"In light of the severity of Maeker's actions, Fidelity would have removed him from his role regardless of whether he had ever made a complaint," the company said.
Write to Andrew Welsch at andrew.welsch@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 15, 2024 12:24 ET (17:24 GMT)
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