Chill v. Calamos Advisors LLC



In February 2015, two shareholders in the Calamos Growth Fund filed a lawsuit in U.S. District Court of the Southern District of New York against Calamos Advisors LLC and its affiliated distributor. The complaint alleges that Calamos has breached its fiduciary duties under Section 36(b) of the Investment Company Act by charging this captive Fund a higher investment advisory fee than it charges its third-party institutional clients.

 

By way of example, the plaintiff's complaint compares the investment advisory fee for the Calamos Growth Fund at 0.83% of assets under management with the average institutional advisory fee of 0.60-0.65% of assets under management. This difference results in millions of dollars of excess fees being charged for identical and substantially similar services being provided.

 

The plaintiffs also allege excessive 12b-1 distribution fees.

 

After pleadings were filed by both sides, the District Court denied a motion to dismiss by Calamos on March 28, 2016.  Discovery then commenced.  On April 10, 2017, the plaintiffs agreed to dismiss their 12b-1 claims against Calamos.  The advisory fee claims remain in the lawsuit.

 

On October 13, 2017, Calamos filed a motion for summary judgment in the case.  The plaintiffs filed their opposition brief on November 17, and Calamos filed its reply brief on December 15, 2017.

  • Calamos Files Reply Brief
    On December 15, 2017, Calamos filed its reply brief on the motion for summary judgment. In its brief, the defendant argues that the plaintiffs are unable to present evidence to meet the Jones standard for a Section 36(b) claim. Summary judgment should be granted since the plaintiffs have failed to raise any genuine issue of material fact showing that the advisory fee was not the "product of arm's length bargaining."
  • Plaintiffs File Opposition Brief
    The plaintiffs filed their brief opposing the motion for summary judgment on November 17, 2017. The plaintiffs argue that liability can be found independently of a fund board's decision-making process. The question before the Court is whether the advisory fee exceeds the "arm's length range." The plaintiffs' allegations involve factual issues that can only be resolved at a trial on the merits.
  • Calamos Files Motion for Summary Judgment
    On October 13, 2017, Calamos filed a motion for summary judgment in the case. In its brief, Calamos argues that the plaintiffs are unable to demonstrate that the review by the independent trustees of the advisory fee was not so defective as to warrant "judicial second-guessing."
  • Plaintiffs Stipulation of Dismissal - 12b-1 Claims
    On April 10, 2017, the plaintiffs voluntarily agreed to dismiss their claims of excessive 12b-1 distribution fees.
  • Court Denies Calamos Motion to Dismiss
    On March 28, 2016, the District Court denied the motion to dismiss filed by Calamos.
  • Shareholders File Excessive Fee Complaint Against Calamos Advisors
    On February 11, 2015, two shareholders of the Calamos Growth Fund filed a complaint against Calmos Advisors LLC. The complaint alleges that Calamos breached its fiduciary duties by charging higher investment advisory fees to this "captive" Fund than it charges its third-party institutional clients in "arm's length" transactions.

In February 2015, two shareholders in the Calamos Growth Fund filed a lawsuit in U.S. District Court of the Southern District of New York against Calamos Advisors LLC and its affiliated distributor. The complaint alleges that Calamos has breached its fiduciary duties under Section 36(b) of the Investment Company Act by charging this captive Fund a higher investment advisory fee than it charges its third-party institutional clients.

 

By way of example, the plaintiff's complaint compares the investment advisory fee for the Calamos Growth Fund at 0.83% of assets under management with the average institutional advisory fee of 0.60-0.65% of assets under management. This difference results in millions of dollars of excess fees being charged for identical and substantially similar services being provided.

 

The plaintiffs also allege excessive 12b-1 distribution fees.

 

After pleadings were filed by both sides, the District Court denied a motion to dismiss by Calamos on March 28, 2016.  Discovery then commenced.  On April 10, 2017, the plaintiffs agreed to dismiss their 12b-1 claims against Calamos.  The advisory fee claims remain in the lawsuit.

 

On October 13, 2017, Calamos filed a motion for summary judgment in the case.  The plaintiffs filed their opposition brief on November 17, and Calamos filed its reply brief on December 15, 2017.

Document Title: 
Calamos Files Reply Brief
Document Desc: 
On December 15, 2017, Calamos filed its reply brief on the motion for summary judgment. In its brief, the defendant argues that the plaintiffs are unable to present evidence to meet the Jones standard for a Section 36(b) claim. Summary judgment should be granted since the plaintiffs have failed to raise any genuine issue of material fact showing that the advisory fee was not the "product of arm's length bargaining."
Document Title: 
Plaintiffs File Opposition Brief
Document Desc: 
The plaintiffs filed their brief opposing the motion for summary judgment on November 17, 2017. The plaintiffs argue that liability can be found independently of a fund board's decision-making process. The question before the Court is whether the advisory fee exceeds the "arm's length range." The plaintiffs' allegations involve factual issues that can only be resolved at a trial on the merits.
Document Title: 
Calamos Files Motion for Summary Judgment
Document Desc: 
On October 13, 2017, Calamos filed a motion for summary judgment in the case. In its brief, Calamos argues that the plaintiffs are unable to demonstrate that the review by the independent trustees of the advisory fee was not so defective as to warrant "judicial second-guessing."
Document Title: 
Plaintiffs Stipulation of Dismissal - 12b-1 Claims
Document Desc: 
On April 10, 2017, the plaintiffs voluntarily agreed to dismiss their claims of excessive 12b-1 distribution fees.
Document Title: 
Court Denies Calamos Motion to Dismiss
Document Desc: 
On March 28, 2016, the District Court denied the motion to dismiss filed by Calamos.
Document Title: 
Shareholders File Excessive Fee Complaint Against Calamos Advisors
Document Desc: 
On February 11, 2015, two shareholders of the Calamos Growth Fund filed a complaint against Calmos Advisors LLC. The complaint alleges that Calamos breached its fiduciary duties by charging higher investment advisory fees to this "captive" Fund than it charges its third-party institutional clients in "arm's length" transactions.