Whistle-blower shield law gets Supreme Court review

washington » The Supreme Court will rule on the reach of the 2002 Sarbanes-Oxley investor-protection law, agreeing to decide whether the law’swhistle-blower protections cover the employees of a publicly traded entity’s contractors.

The justices Monday said they will hear an appeal from two former employees of a privately held company that provides investment advice and management services to the Fidelitymutual funds. The work- ers say they lost their jobs after reporting fraud.

The case will likely pit business groups against President Barack Obama’s administration, testing the scope of a law enacted after the collapses of Enron andWorldCom.

The case “presents a question of pivotal importance to the integrity of the securities markets and to the preservation of investor confidence,” the two employees, Jackie Hosang Lawson and Jonathan M. Zang, argued in their appeal.

The case will be of particular importance to the mutual fund industry because of its unusual corporate structure. While the funds themselves are publicly traded, they typically have few if any employees, instead using privately held companies to conduct day-to-day activities.

Lawson and Zang worked for units of FMR, Fidelity’s corporate holding company. Lawson complained that expenseswere being inflated and, ultimately, passed on to fund shareholders. Zang contended that a Fidelity statement filed with the Securities and Exchange Commission misrepresented how portfolio managers were compensated.