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CMFI is monitoring important court cases affecting the rights of individual mutual fund investors.
- IN RE AMERICAN MUTUAL FUNDS FEE LITIGATION
Two plaintiff law firms initiated this lawsuit on behalf of the shareholders of the American Funds, alleging that the payment of advisory, Rule 12b-1, and administrative service fees by the Funds were improper, excessive, and not in the interest of shareholders. This lawsuit also contends that these fees charged to the Funds and their shareholders were not reasonably related to the services provided.
- KASILAG V. HARTFORD INVESTMENT FINANCIAL SERVICES
Several shareholders of the Hartford Funds brought this case against the investment advisor to the Funds. The complaint alleges that Hartford Investment Financial Services charged excessive investment management and Rule 12b-1 fees, in violation of Section 36(b) of the Investment Company Act of 1940.
- Sanford V. Equitable Funds Management Group
Shareholders in the AXA Funds brought this lawsuit under Section 36(b) of the Investment Company Act, alleging a breach of fiduciary duty by the investment adviser for the compensation it receives for providing investment advisory services.
- SIVOLELLA V. AXA EQUITABLE LIFE INSURANCE CO.
This lawsuit alleges that AXA charged excessive investment management fees to the AXA Funds. A small portion of of the fees were forwarded to a group of sub-advisors for investment management services and AXA retained the majority of the fees itself. The Plaintiff believes that these fees were excessive, considering AXA's limited supervisory role over the sub-advisors to the Funds.
- American Chemicals & Equipment 401(k) Retirement Plan v. Principal Management Corp.
This lawsuit alleges that Principal Management is collecting excessive investment management fees for its mutual funds and then paying only 1/3 of the fees to sub-advisers who are actually responsible for providing the day-to-to-day investment management services to the funds involved.
- Cox v. ING Investments LLC
A shareholder of the ING Global Real Estate Fund has filed a lawsuit against ING Investments, alleging that ING is charging excessive investment management fees and then using a sub-adviser to actually provide the advisory services at a much lower cost.
- McClure v. Russell Investment Management Company
A shareholder of several Russell Funds has filed a lawsuit alleging the collection of excessive fees by the Fund manager through the use of sub-advisers to provide investment management services.
- Curd v. SEI Investments Management Corporation
Shareholders of several SEI Funds have filed a lawsuit alleging that SEI is using sub-advisers to provide investment management services to its Funds and then collecting a large investment management fee for itself.
- Clancy v. BlackRock Investment Management
Two shareholders in the BlackRock Global Allocation Fund filed a lawsuit alleging that the investment advisers to the Fund are charging excessive advisory fees that are as much as 109% higher than the rates negotiated at arm's length by BlackRock with other clients for similar investment advisory services.
- Foote v. BlackRock Advisors LLC
A shareholder in the BlackRock Global Allocation Fund sued BlackRock, alleging improper and excessive advisory fees. The lawsuit claims that BlackRock is retaining a substantial portion of the Fund's advisory fees, despite delegating almost all of the investment management duties to an affilated sub-adviser.
- Fox v. BlackRock Advisors LLC
A shareholder in the BlackRock Equity Dividend Fund filed a lawsuit against BlackRock, alleging improper and excessive advisory fees. The lawsuit asserts that BlackRock is retaining a substantial portion of the Fund's advisory fees, despite delegating almost all of the investment management duties to an affiliated sub-adviser. The complaint also asserts that the Fund's fee schedule does not pass onto the shareholders the savings from economies of scale.
- Davidson v. BlackRock Advisors LLC
A shareholder with more than $1 million invested in the BlackRock Global Allocation Fund filed a class action complaint against BlackRock. This lawsuit asserts that the advisory fee rate charged to the Fund by BlackRock is excessive for the value of the work actually performed. The suit also alleges that the subadvisory fees paid to sub-advisers affiliated with BlackRock are excessive compared to those charged in arm's length transactions.
- In Re BlackRock Mutual Funds Advisory Fee Litigation
This case is a consolidation of four separate lawsuits against BlackRock. These suits allege that the investment advisory fees charged to certain BlackRock funds are significantly higher than the rates negotiated at arm's length for the same or similar subadvisory services with other funds.
- Redus-Tarchis v. New York Life Investment Management LLC
Several shareholders in three MainStay Funds allege that the investment adviser retained a significant portion of the advisory fees charged to the Funds, while delegating substantially all of its responsibilities for providing investment management services to Fund sub-advisers.
- Goodman v. J.P. Morgan Investment Management
Two shareholders in several J.P. Morgan bond funds filed a lawsuit alleging excessive investment advisory fees by J.P. Morgan. The plaintiffs assert that the investment advisory fees charged to their bond funds are as much as 525% higher than the rates negotiated at arm's length by J.P. Morgan with other clients for the same or substantially similar services.
- Campbell Family Trust v. JPMorgan Investment Management
Seven shareholders filed an excessive fee lawsuit against JP Morgan, alleging that the investment adviser is charging advisory fees and affiliated administrator's fees that are too high compared to typical arm's length transactions for the same services.
- Kennis Trust v. First Eagle Investment Management
Shareholders in the First Eagle Global Fund and the First Eagle Overseas Funds are challenging the level of advisory fees charged to the Funds by First Eagle, in comparison to the fees being charged by First Eagle for similar services as a subadviser to third-party mutual funds.
- Hebda v. Davis Selected Advisers LP
Two shareholders in the Davis New York Venture Fund filed a lawsuit challenging the level of advisory fees charged to the Fund, in comparison to the fee levels being charged by Davis for mutual funds where it serves as a subadviser.
- Chill v. Davis Selected Advisers LP
Shareholders in the Davis New York Venture Fund filed a excessive fee complaint against Davis Advisers, alleging that the management company is charging significantly more in advisory fees than it charges as a subadviser to third-party funds that bear the Davis name.
- Chill v. Calamos Advisors LLC
Two shareholders in the Calamos Growth Fund allege that Calamos Advisors breached its fiduciary duties under the Investment Company Act by charging significantly higher investment advisory fees to its captive mutual funds than it charges its third-party institutional clients in "arm's-length" transactions.
- Zehrer v. Harbor Capital Advisors
A shareholder in the Harbor International Fund has filed a lawsuit alleging improper and excessive fees through the Fund's use of sub-advisers.
- Kenny v. PIMCO LLC
A shareholder in the PIMCO Total Return Fund alleges that PIMCO's advisory fee is excessive for this Fund, especially when compared to the rates charged to private clients of PIMCO who are invested in essentially the same assets.
- Ingenhutt v. State Farm Investment Management
Two shareholders in State Farm mutual funds allege that the advisor is charging excessive advisory fees while delegating investment management responsibilities to an unaffiliated investment manager.
- Wayne County Employees' Retirement System v. FMI
A retirement plan for public employees alleges that FMI has been charging excessive advisory fees to its largest captive mutual fund, compared to the fees that it charges its institutional clients for the same or similar advisory services.
- Kennis v. Metropolitan West Asset Management
A shareholder in the Metropolitan West Total Return Bond Fund filed a lawsuit in federal court against the investment adviser for excessive advisory fees, comparing these fees to the fees it is charging for similar subadvisory services to unaffiliated mutual funds.
- North Valley GI Medical Group v. Prudential Investments
Several shareholders filed an excessive fee lawsuit against Prudential Investments, alleging that it is charging excessive advisory fees for six of its captive mutual funds, after delegating portfolio responsibilities entirely to multiple sub-advisers.
- Ventura v. Principal Management Corporation
Several shareholders in the Principal Funds filed a 36(b) excessive fee lawsuit, alleging that Principal is delegating substantially all of its responsibilities for providing advisory services while retaining almost two-thirds of the advisory fee.
- Obeslo v. Great-West Capital Management
Three shareholders in the Great-West Funds allege that the investment adviser is retaining more than two-thirds of the advisory fees for its index and actively managed mutual funds, while delegating substantially all of the advisory services to third-party sub-advisers.
- Zoidis v. T. Rowe Price Associates
A group of shareholders in the T. Rowe Price Funds filed a lawsuit alleging that T. Rowe Price is overcharging its retail mutual funds for advisory services, when compared to the rates it charges as a sub-adviser to other mutual funds.
- Tibble v. Edison International
Employees of Edison International filed a lawsuit alleging that the fiduciaries of their 401(k) plan choose retail share classes of mutual funds over less expensive institutional share classes of the same funds. The more expensive funds provided revenue-sharing payments back to the company that reduced plan administrative expenses.
- Tussey v. ABB, Inc.
A group of participants in 401(k) retirement plans sponsored by of ABB, Inc. brought this case alleging a breach of fiduciary duties under ERISA for excessive fees and the use of revenue sharing practices.
- RESO V. ARTISAN PARTNERS LIMITED PARTNERSHIP
This lawsuit challenges the investment advisory agreements for several Artisan Funds, alleging that the defendant breached its fiduciary duty under Section 36(b) of the Investment Company Act in charging investment advisory fees that are higher than what would be negotiated in "arm's length" transactions.
KORLAND V. CAPITAL RESEARCH AND MANAGEMENT CO.
A shareholder of the EuroPacific Growth Fund, part of the American Funds, initiated a lawsuit against the investment adviser of this Fund, Capital Research & Management Company, and the distributor of Fund shares, American Funds Distributors, Inc. This lawsuit seeks to recover for the Fund excessive and disproportionate Rule 12b-1 fees and investment advisory fees paid by the Fund to the defendants, in violation of their fiduciary duties under Section 36(b) of the Investment Company Act of 1940.
TURNER V. DAVIS SELECTED ADVISERS
A shareholder of Davis New York Venture Fund initiated a lawsuit against the investment adviser (Davis Selected Advisers) and the distributor (Davis Distributors) of this Fund. This lawsuit seeks to recover for the Fund certain excessive and disproportionate fees paid by the Fund to the defendants, who allegedly breached their fiduciary duties to the Fund under Section 36(b) of the Investment Company Act of 1940.
- SMITH V. FRANKLIN TEMPLETON DISTRIBUTORS, INC.
A shareholder of the Franklin Custodian Funds initiated a lawsuit on behalf of the Funds against the trustees of the Funds and the distributor of the Funds (Franklin/Templeton Distributors). The lawsuit alleges that the defendants approved “asset-based compensation” to broker-dealers holding mutual fund shares in a brokerage account, contrary to the Investment Advisers Act of 1940 and a recent D.C. Circuit Court of Appeals case, Financial Planning Association v. SEC.
- SMITH V. OPPENHEIMER FUNDS DISTRIBUTOR, INC.
A shareholder of the Oppenheimer Gold & Special Minerals Fund initiated a lawsuit on behalf of the Fund against the trustees of the Fund and the distributor of the Fund (Oppenheimer Funds Distributor). The lawsuit alleges that the defendants approved “asset-based compensation” to broker-dealers holding mutual fund shares in a brokerage account, contrary to the Investment Advisers Act of 1940 and a recent D.C. Circuit Court of Appeals case, Financial Planning Association v. SEC.
- WIENER V. EATON VANCE DISTRIBUTORS, INC.
A shareholder of the Eaton Vance Municipals Trust initiated a lawsuit on behalf of the Trust against the trustees of these mutual funds and the distributor of the Trust (Eaton Vance Distributors). The lawsuit alleges that the defendants approved “asset-based compensation” to broker-dealers holding mutual fund shares in a brokerage account, contrary to the Investment Advisers Act of 1940 and a recent D.C. Circuit Court of Appeals case, Financial Planning Association v. SEC.
- CURRAN V. PRINCIPAL MANAGEMENT CORPORATION
A shareholder in the Principal Funds initiated a lawsuit against the Funds’ adviser (Principal Management Corporation) and distributor (Principal Funds Distributor). The Complaint seeks to rescind the investment advisory agreements and distribution plans and recover fees charges by the defendants. The Complaint alleges that the defendants breached their fiduciary duty to the shareholders of the Funds by using multiple layers of advisory fees that the plaintiff believes are excessive. The Complaint also alleges that Rule 12b-1 fees for sales and distribution activities are also excessive.
- KREEK V. WELLS FARGO & COMPANY
This is a class action lawsuit against Wells Fargo for creating undisclosed material conflicts of interest by entering into revenue-sharing agreements with broker-dealers and other intermediaries selling the Wells Fargo Funds.
- JONES V. HARRIS ASSOCIATES (OAKMARK FUNDS)
This lawsuit was initiated by shareholders in the Oakmark Funds, alleging that the investment adviser was charging advisory fees that were disproportionate to the services provided and not within the range of what would have been negotiated in an arm's length transaction. The case has been to the U.S. Supreme Court, which confirmed the Gartenberg standards and described the fiduciary duty owed to investors by an investment adviser as a test of whether or not the transaction carries the earmarks of an arm's length transaction.
- GALLUS V. AMERIPRISE FINANCIAL (RIVERSOURCE FUNDS)
This lawsuit was initiated by shareholders of 11 mutual funds managed by Ameriprise Financial. The lawsuit alleges that Ameriprise Financial breached its duty under the Investment Company Act by charging substantially higher advisory fees to its retail mutual funds than what it charges its institutonal clients for similar services.
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