Curd v. SEI Investments Management Corporation



On December 11, 2013, two shareholders in the SEI Funds filed a complaint against SEI Investments in U.S. District Court for the Eastern District of Pennsylvania.

 

The plaintiffs allege that SEI delegates almost all of its investment management duties to certain sub-advisers. However, SEI retains a substantial portion of the investment management fees that it charges the SEI Funds. As an example, in fiscal year 2012, SEI charged nearly $27 million in investment management fees. SEI then paid its sub-advisers over $16 million for investment management services to its Funds, retaining $10.3 million for itself.

 

The plaintiffs allege that these arrangements are a breach of SEI's fiduciary duty to its Funds and are in violation of Section 36(b) of the Investment Company Act.

 

On February 24, 2014, SEI filed a motion to dismiss the plaintiffs' complaint.  In its motion, SEI states that: (1) it is responsible for the overall management and investment performance of its funds; and (2) the public disclosures by SEI show that it is performing "a huge amount of work."

 

In August 2014, the Court required the plaintiffs to refile their complaint.  An amended complaint was filed on October 2, 2014.

 

SEI filed a motion to dismiss the amended complaint on November 24, 2014, and the plaintiffs filed their opposition brief on January 9, 2015. 

 

On July 14, 2015, the Court denied the motion to dismiss regarding the subadvisory allegations against SEI, permitting the case to move forward.

 

On November 21, 2016, the parties filed a stipulation of dismissal.  It is assumed that the parties settled the case privately.

  • District Court Denies Motion to Dismiss
    On July 14, 2015, the District Court denied SEI's motion to dismiss the case. The Court found that the allegations by the plaintiffs support a plausible claim for relief under the Investment Company Act. In her opinion, the judge noted that despite significant growth in the net assets of the SEI Funds over the past 15 years, the management company has not shared economies of scale benefits with shareholders.
  • SEI Files Its Reply Brief
    On January 30, 2015, SEI filed its reply brief on the motion to dismiss.
  • Plaintiffs File Opposition Brief to Motion to Dismiss
    On January 9, 2015, the plaintiffs filed a brief in opposition to SEI's motion to dismiss the amended complaint. The plaintiffs argue that their factual allegations properly state Section 36(b) claims under the liberal federal pleading standard and, therefore, SEI's motion to dismiss should be denied.
  • SEI Files Motion to Dismiss the Amended Complaint
    On November 24, 2014, SEI filed a motion to dismiss the amended complaint. In its brief, SEI argues that the plaintiffs have not pled facts sufficient to state a claim under section 36(b) of the Investment Company Act.
  • Plaintiffs File Amended Complaint
    On October 2, 2014, the plaintiffs filed an amended complaint in this case. In an earlier order, the Court ruled that the original complaint lacked allegations that SEI charged excessive fees at any time during the one-year period prior to its filing on December 11, 2013.
  • SEI Files Reply Brief on Its Motion to Dismiss
    On May 19, 2014, SEI filed a reply brief on its motion to dismiss the complaint. In its brief, SEI argues that the plaintiffs have failed to allege that SEI's advisory services do not warrant the compensation it receives.
  • Plaintiffs File Brief Opposing Motion to Dismiss
    On April 28, 2014, the plaintiffs filed a brief in opposition to the defendants' motion to dismiss the complaint. The plaintiffs argue that other courts hearing similar subadviser cases have denied motions to dismiss and, instead, have permitted the parties to proceed to trial to resolve their fact-based disagreements.
  • SEI Files Motion to Dismiss the Complaint
    On February 24, 2014, SEI filed a motion to dismiss the plaintiffs' complaint. In its motion, SEI states that: (1) it is responsible for the overall management and investment performance of its funds; and (2) the public disclosures by SEI show that it performs "a huge amount of work."
  • Two Shareholders File Excessive Fee Complaint Against SEI Investments
    On December 11, 2013, two shareholders in the SEI Funds filed a complaint against SEI, alleging that the Fund manager is charging excessive investment management fees through the use of sub-advisers who are providing all of the investment management services at a much lower cost than what shareholders are paying.

On December 11, 2013, two shareholders in the SEI Funds filed a complaint against SEI Investments in U.S. District Court for the Eastern District of Pennsylvania.

 

The plaintiffs allege that SEI delegates almost all of its investment management duties to certain sub-advisers. However, SEI retains a substantial portion of the investment management fees that it charges the SEI Funds. As an example, in fiscal year 2012, SEI charged nearly $27 million in investment management fees. SEI then paid its sub-advisers over $16 million for investment management services to its Funds, retaining $10.3 million for itself.

 

The plaintiffs allege that these arrangements are a breach of SEI's fiduciary duty to its Funds and are in violation of Section 36(b) of the Investment Company Act.

 

On February 24, 2014, SEI filed a motion to dismiss the plaintiffs' complaint.  In its motion, SEI states that: (1) it is responsible for the overall management and investment performance of its funds; and (2) the public disclosures by SEI show that it is performing "a huge amount of work."

 

In August 2014, the Court required the plaintiffs to refile their complaint.  An amended complaint was filed on October 2, 2014.

 

SEI filed a motion to dismiss the amended complaint on November 24, 2014, and the plaintiffs filed their opposition brief on January 9, 2015. 

 

On July 14, 2015, the Court denied the motion to dismiss regarding the subadvisory allegations against SEI, permitting the case to move forward.

 

On November 21, 2016, the parties filed a stipulation of dismissal.  It is assumed that the parties settled the case privately.

Document Title: 
District Court Denies Motion to Dismiss
Document Desc: 
On July 14, 2015, the District Court denied SEI's motion to dismiss the case. The Court found that the allegations by the plaintiffs support a plausible claim for relief under the Investment Company Act. In her opinion, the judge noted that despite significant growth in the net assets of the SEI Funds over the past 15 years, the management company has not shared economies of scale benefits with shareholders.
Document Title: 
SEI Files Its Reply Brief
Document Desc: 
On January 30, 2015, SEI filed its reply brief on the motion to dismiss.
Document Title: 
Plaintiffs File Opposition Brief to Motion to Dismiss
Document Desc: 
On January 9, 2015, the plaintiffs filed a brief in opposition to SEI's motion to dismiss the amended complaint. The plaintiffs argue that their factual allegations properly state Section 36(b) claims under the liberal federal pleading standard and, therefore, SEI's motion to dismiss should be denied.
Document Title: 
SEI Files Motion to Dismiss the Amended Complaint
Document Desc: 
On November 24, 2014, SEI filed a motion to dismiss the amended complaint. In its brief, SEI argues that the plaintiffs have not pled facts sufficient to state a claim under section 36(b) of the Investment Company Act.
Document Title: 
Plaintiffs File Amended Complaint
Document Desc: 
On October 2, 2014, the plaintiffs filed an amended complaint in this case. In an earlier order, the Court ruled that the original complaint lacked allegations that SEI charged excessive fees at any time during the one-year period prior to its filing on December 11, 2013.
Document Title: 
SEI Files Reply Brief on Its Motion to Dismiss
Document Desc: 
On May 19, 2014, SEI filed a reply brief on its motion to dismiss the complaint. In its brief, SEI argues that the plaintiffs have failed to allege that SEI's advisory services do not warrant the compensation it receives.
Document Title: 
Plaintiffs File Brief Opposing Motion to Dismiss
Document Desc: 
On April 28, 2014, the plaintiffs filed a brief in opposition to the defendants' motion to dismiss the complaint. The plaintiffs argue that other courts hearing similar subadviser cases have denied motions to dismiss and, instead, have permitted the parties to proceed to trial to resolve their fact-based disagreements.
Document Title: 
SEI Files Motion to Dismiss the Complaint
Document Desc: 
On February 24, 2014, SEI filed a motion to dismiss the plaintiffs' complaint. In its motion, SEI states that: (1) it is responsible for the overall management and investment performance of its funds; and (2) the public disclosures by SEI show that it performs "a huge amount of work."
Document Title: 
Two Shareholders File Excessive Fee Complaint Against SEI Investments
Document Desc: 
On December 11, 2013, two shareholders in the SEI Funds filed a complaint against SEI, alleging that the Fund manager is charging excessive investment management fees through the use of sub-advisers who are providing all of the investment management services at a much lower cost than what shareholders are paying.