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CORRECTED-Ex-Fidelity executive claims she faced retaliation for whistle-blowing

whistle-blowing@ (Corrects headline to show that former executive claims she faced retaliation, instead of that she claims she was fired)

BOSTON, Oct 24 (Reuters) - A former Fidelity Investments executive took the mutual funds company to trial on Tuesday over her claims that it retaliated against her after she complained it had potentially defrauded investors by incorrectly calculating expenses

Jackie Hosang Lawson, a former senior director of finance at Fidelity, resigned in 2007 after being subjected to a "sustained campaign of retaliation" after she raised her concerns, her lawyer, Robert Friedman, told a jury in Boston federal court.

But William Kettlewell, a lawyer for the company, countered that Lawson started making baseless complaints about fraud after being passed over for a job. He said her complaints involved routine errors, which Fidelity sought to fix.

"She began to twist some of these routine issues and routine concerns into something nefarious," Kettlewell said in his opening statement.

The trial came after the U.S. Supreme Court in 2014 revived Lawson's lawsuit and expanded who was protected by the whistleblower protections of Sarbanes-Oxley Act, which was enacted in 2002 after the accounting scandal at Enron Corp.

Lawson is seeking $8.4 million for lost compensation, reputation and emotional harm and attorneys' fees and costs stemming from what she said was retaliation she incurred in violation of Sarbanes-Oxley.

According to Friedman, Lawson before her resignation repeatedly raised concerns about how Fidelity accounted for tens of millions of dollars in expenses that were reported to investors.

Her lawyers have said that said by inflating its expenses, Fidelity, which manages about $2.3 trillion in assets, could potentially boost its fees.

"She did what she felt she needed to do to make the situation right and protect shareholders from what she saw: She reported her findings," Friedman said in his opening statement.

He said that in response, Lawson suffered a reduction in compensation and "unrestrained harsh treatment" aimed at making it harder for her to do her job, leading to her resignation.

She brought her concerns to her managers, Fidelity's general counsel and the U.S. Securities and Exchange Commission, her lawyers said. She also filed a complaint about the retaliation with the U.S. Occupational Safety and Health Administration.

The SEC closed an investigation into Lawson's claims in 2012, according to court papers. U.S. District Judge Douglas Woodlock on Tuesday blocked Fidelity's attempt to introduce that fact at trial as evidence.

The case is Lawson v. FMR LLC, et al, U.S. District Court, District of Massachusetts, No. 08-10466. (Reporting by Nate Raymond in Boston; Editing by Marguerita Choy)