A shareholder in the BlackRock Global Allocation Fund filed a lawsuit against BlackRock in U.S. District Court in New Jersey, alleging improper and excessive advisory fees. The plaintiff's complaint asserts that BlackRock is retaining a substantial portion of the advisory fees it is charging, despite delegating almost all of the investment management duties to an affiliated sub-adviser.
For example, in fiscal year 2013, the Global Allocation Fund paid BlackRock approximately $412 million in investment management fees. Of that amount, BlackRock retained $177 million for itself and paid its affiliated sub-adviser $235 million in investment management fees. The lawsuit alleges that the additional administrative and supervisory services provided by BlackRock are minimal, resulting in excessive advisory fee charges.
The plaintiff alleges that this fee structure is a breach of BlackRock's fiduciary duty to the Fund. The plaintiff seeks damages and a recission of the contracts that form the basis for the excessive fees.
On May 6, 2014, this case was consolidated with the Clancy and Fox cases into In re BlackRock Mutual Funds Advisory Fee Litigation.