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.