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.

 

This case was filed in U.S. District Court for the Southern District of Iowa. On June 8, 2010, the Court granted in part and denied in part the defendants’ Motion to Dismiss. The case may proceed on the counts of excessive advisory fees and excessive distribution fees. On October 28, 2011, the plaintiff filed a new complaint with the Court. Motions for Summary Judgment were filed by both parties in February and March of 2013.

 

In June 2013, the case was settled and a stipulation of dismissal was filed with the Court by the parties.  The terms of settlement were not disclosed.

  • Order of Dismissal with Prejudice
    On June 12, 2013, the Court issued an Order accepting a confidential settlement of the case, through a joint stipulation of dismissal with prejudice by the parties.
  • Stipulation of Dismissal with Prejudice
    On June 10, 2013, the parties informed the Court that they have reached a settlement of this case and filed a stipulation of dismissal with prejudice. The terms of settlement were not disclosed.
  • Defendants File Motion for Summary Judgment
    On March 19, 2013, the defendants filed a Motion for Summary Judgment. The Motion states that the plaintiffs cannot establish any genuine disputed issue of material fact that would preclude summary judgment. The defendants allege that the plaintiffs cannot establish that the fees paid by the SAM Funds were so disproprtionately large that they bore no reasonable relationship to the services rendered and could not have been the product of arm's-length barganing.
  • Plaintiffs File Motion for Partial Summary Judgment
    On February 22, 2013, the plaintiffs filed a Motion for Partial Summary Judgment on one issue in this litigation. The issue involves whether the Investment Company Act of 1940 limits recovery of damages to those incurred during the period one year before the lawsuit was filed. The plaintiffs believe that the plain language of Section 36(b)(3) of the Investment Company Act only prohibits the recovery of damages that are incurred prior to one year before a lawsuit is initiated. Thus, the plaintiffs argue that the Act permits the recovery of damages from one year prior to the filing of a complaint and continuing through the date of trial.
  • Plaintiff Files Second Anniversary Complaint
    On October 28, 2011, the plaintiffs filed a new complaint on the two year anniversary of the filing of the original case.
  • Court Decides to Grant In Part and Deny In Part the Motion to Dismiss
    On June 8, 2010, the Court granted the defendants’ Motion to Dismiss in part. In its decision, the Court dismissed the plaintiff’s allegation regarding the existence of excess profits from economies of scale, but permitted the case to continue regarding the allegations of excessive layers of advisory fees and the charging of excessive distribution fees. The Court stated that the plaintiffs’ allegations all support a reasonable inference that the investment adviser collected excessive fees for advising the Principal Funds. The Court also stated that the plaintiffs have met their burden by alleging that fees collected by the distributor for its distribution services surpassed the value of those services, and the manner in which those fees were assessed did not correspond to the type of services performed but, rather, resemble fees collected for advisory services.
  • Defendants File Motion to Dismiss the Case
    On January 29, 2010, the defendants filed a Motion to Dismiss the Amended Complaint. In their Motion, the defendants argued that the fees charged met the Gartenberg standard of not being “so disproportionately large that it bears no relationship to the services rendered and could not have been the product of arm’s length bargaining.”
  • Shareholders File Amended Complaint on Behalf of the Principal Funds
    On January 15, 2010, two shareholders filed an Amended Complaint on behalf of the Principal Funds and against the Funds’ investment adviser and distributor.
  • Shareholder Files Complaint on Behalf of the Principal Funds
    On October 28, 2009, a shareholder in the Principal Funds filed a Complaint against the Funds’ investment adviser and distributor. The Complaint sought to recover excessive advisory and distribution fees charged to the Funds by its investment adviser and distributor.
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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.

 

This case was filed in U.S. District Court for the Southern District of Iowa. On June 8, 2010, the Court granted in part and denied in part the defendants’ Motion to Dismiss. The case may proceed on the counts of excessive advisory fees and excessive distribution fees. On October 28, 2011, the plaintiff filed a new complaint with the Court. Motions for Summary Judgment were filed by both parties in February and March of 2013.

 

In June 2013, the case was settled and a stipulation of dismissal was filed with the Court by the parties.  The terms of settlement were not disclosed.

Document Title: 
Order of Dismissal with Prejudice
Document Desc: 
On June 12, 2013, the Court issued an Order accepting a confidential settlement of the case, through a joint stipulation of dismissal with prejudice by the parties.
Document Title: 
Stipulation of Dismissal with Prejudice
Document Desc: 
On June 10, 2013, the parties informed the Court that they have reached a settlement of this case and filed a stipulation of dismissal with prejudice. The terms of settlement were not disclosed.
Document Title: 
Defendants File Motion for Summary Judgment
Document Desc: 
On March 19, 2013, the defendants filed a Motion for Summary Judgment. The Motion states that the plaintiffs cannot establish any genuine disputed issue of material fact that would preclude summary judgment. The defendants allege that the plaintiffs cannot establish that the fees paid by the SAM Funds were so disproprtionately large that they bore no reasonable relationship to the services rendered and could not have been the product of arm's-length barganing.
Document Title: 
Plaintiffs File Motion for Partial Summary Judgment
Document Desc: 
On February 22, 2013, the plaintiffs filed a Motion for Partial Summary Judgment on one issue in this litigation. The issue involves whether the Investment Company Act of 1940 limits recovery of damages to those incurred during the period one year before the lawsuit was filed. The plaintiffs believe that the plain language of Section 36(b)(3) of the Investment Company Act only prohibits the recovery of damages that are incurred prior to one year before a lawsuit is initiated. Thus, the plaintiffs argue that the Act permits the recovery of damages from one year prior to the filing of a complaint and continuing through the date of trial.
Document Title: 
Plaintiff Files Second Anniversary Complaint
Document Desc: 
On October 28, 2011, the plaintiffs filed a new complaint on the two year anniversary of the filing of the original case.
Document Title: 
Court Decides to Grant In Part and Deny In Part the Motion to Dismiss
Document Desc: 
On June 8, 2010, the Court granted the defendants’ Motion to Dismiss in part. In its decision, the Court dismissed the plaintiff’s allegation regarding the existence of excess profits from economies of scale, but permitted the case to continue regarding the allegations of excessive layers of advisory fees and the charging of excessive distribution fees. The Court stated that the plaintiffs’ allegations all support a reasonable inference that the investment adviser collected excessive fees for advising the Principal Funds. The Court also stated that the plaintiffs have met their burden by alleging that fees collected by the distributor for its distribution services surpassed the value of those services, and the manner in which those fees were assessed did not correspond to the type of services performed but, rather, resemble fees collected for advisory services.
Document Title: 
Defendants File Motion to Dismiss the Case
Document Desc: 
On January 29, 2010, the defendants filed a Motion to Dismiss the Amended Complaint. In their Motion, the defendants argued that the fees charged met the Gartenberg standard of not being “so disproportionately large that it bears no relationship to the services rendered and could not have been the product of arm’s length bargaining.”
Document Title: 
Shareholders File Amended Complaint on Behalf of the Principal Funds
Document Desc: 
On January 15, 2010, two shareholders filed an Amended Complaint on behalf of the Principal Funds and against the Funds’ investment adviser and distributor.
Document Title: 
Shareholder Files Complaint on Behalf of the Principal Funds
Document Desc: 
On October 28, 2009, a shareholder in the Principal Funds filed a Complaint against the Funds’ investment adviser and distributor. The Complaint sought to recover excessive advisory and distribution fees charged to the Funds by its investment adviser and distributor.