by Miriam Rozen May 8, 2024
A former Fidelity Investments advisor in Dallas filed this week a wrongful termination lawsuit accusing the brokerage of illegally retaliating against him for reporting anti-investor sales tactics.
The plaintiff, Michael Maeker, was fired after reporting “strong evidence” showing 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, according to the complaint, which was filed May 6 in Dallas federal court. Fidelity’s actions violated state securities laws and the Securities and Exchange Commission’s Regulation Best Interest, which requires brokers to place client interests ahead of their own, Maeker alleges.
“Fidelity should be held accountable for its unlawful retaliation and illegal attempt to silence a whistleblower who was only trying to protect himself and fellow FAs and fulfill his obligations to protect investors’ best interests,” Maeker wrote in his complaint.
Maeker’s lawsuit includes alleged recordings of local managers’ instructions 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. It also claims that managers used “Hero” reports which ranked brokers and managers by the portion of “Tier 3” sales that they made.
Advisors and managers earned greater pay and a larger share of bonuses the higher they ranked on the “Hero” reports, Maeker alleges.
Those practices started in 2019 as low-cost index funds and lower commissions reduced revenue streams, Maeker alleges. His manager eschewed Maeker’s approach of abiding by clients’ best interest, Maeker alleges. “The model you described, kind of set it, forget about it, in funds. That was viable for us [Fidelity] for decades, and now we’re bleeding,” the manager told Maeker, according to the lawsuit.
A Fidelity spokesperson denied Maeker’s allegations. Fidelity “will defend itself vigorously,” she added in an emailed statement.
“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,” the spokesperson said. “In other words, Fidelity did not retaliate against him.”
Fidelity fired Maeker in December 2022 after he “misrepresented interactions with clients and improperly used planning tools without confirming with clients the accuracy of the information he input into the tools,” according to his BrokerCheck record. “Such actions inflated employee’s performance metrics,” Fidelity said in its allegations, which Maeker denied in a comment on his BrokerCheck record and in his lawsuit.
Maeker, who began his career at Merrill Lynch in 1996, had spent 24 years with Fidelity. He is now registered with Texas Capital Bank Private Wealth Advisors. His lawyer, Rogge Dunn, said that he was responsible for around $1 billion in assets and earned around $625,000 in revenue per year at the peak of his career, Dunn said.
Maeker’s complaint does not set specific damages but alleged that the firing cost him millions in lost earnings.
The “Hero” reports and related compensation practices persisted for five years but stopped in 2023 after Maeker sent multiple emails to Fidelity officials about his concerns—the same time the company initiated an investigation against him, Maeker’s lawsuit alleges.
-Mason Braswell contributed to this story.