On February 21, 2014, two shareholders in the BlackRock Global Allocation Fund filed a lawsuit against BlackRock Investment Management in U.S. District Court for New Jersey. The lawsuit alleges that BlackRock is charging investment advisory fees to the Fund that are 52% -109% higher than than the rates negotiated at arm's length by BlackRock with at least three third-party mutual funds for similar investment advisory services. BlackRock is acting as a subadviser to these three mutual funds.
The plaintiffs' Complaint alleges that BlackRock has breached its fiduciary duty to shareholders under Section 36(b) of the Investment Company Act, by charging investment advisory fees that are so disproportionately large that they bear no reasonable relationship to the value of the services provided by the investment adviser and could not have been the product of arm's length bargaining.
On May 6, 2014, this case was consolidated with the Foote and Fox subadviser cases into In re BlackRock Mutual Funds Advisory Fee Litigation.