In Re BlackRock Mutual Funds Advisory Fee Litigation



This docket consolidates the Clancy, Foote, Fox and Davidson subadviser cases against BlackRock in U.S. District Court for the District of New Jersey.  In general terms, these cases allege that BlackRock is charging investment advisory fees that are significantly higher than the fees it charges for the same or similar subadvisory services to other mutual funds.

 

As an example, the BlackRock Global Allocation Fund paid an effective investment advisory fee rate of 66 basis points (0.66%) in 2013.  At the same time, BlackRock provided subadvisory services to third-party mutual funds (using the same investment strategy) at between 32 and 44 basis points (0.32%-0.44%), or 50-106% less than what it was charging its own funds.

 

A second example is the BlackRock Equity Dividend Fund, which paid an effective advisory fee rate of 54 basis points (0.54%) in 2013.  During the same period, BlackRock charged between 27.5 and 35 basis points (0.275%-0.35%) for subadvisory services to third-party funds with the same investment objectives, or 54%-96% less than what it was charging its own funds. 

 

The plaintiffs filed their consolidated complaint on May 27, 2014, and the defendants filed a motion to dismiss the case on June 26, 2014.  The plaintiffs filed an opposition brief on July 25, 2014, and BlackRock filed its reply brief on August 11, 2014.

 

On March 27, 2015, the Court issued an opinion denying the BlackRock motion to dismiss.  The Court determined that the plaintiffs have pled sufficient facts about the advisory fees paid to BlackRock--and their relationship to the services rendered--to present a plausible claim that the fees are disproportionately large.

 

The consolidated case is now in discovery.

  • Court Denies BlackRock Motion to Dismiss
    On March 27, 2015, the District Court issued an opinion denying BlackRock's motion to dismiss the case. The Court found that the plaintiffs have met their burden to survive a motion to dismiss by pleading sufficient facts about the advisory fees paid to BlackRock--and their relationship to the services rendered--to present a plausible claim that the fees are disproportionately large.
  • BlackRock Files Reply Brief
    On August 11, 2014, BlackRock filed a reply brief on its motion to dismiss. In its brief, BlackRock argues that its advisory fees are lower than the advisory fees charged by the sponsors of the sub-advised funds mentioned in the complaint.
  • Plaintiffs File Brief Opposing Motion to Dismiss
    On July 25, 2014, the plaintiffs filed their brief in opposition to the motion to dismiss their case. The plaintiffs argue that there is a large disparity between the fees charged to BlackRock funds and to the funds it provides subadvisory services. This disparity cannot be explained by any difference in the investment advisory services provided.
  • BlackRock Files Motion to Dismiss the Case
    On June 26, 2014, BlackRock filed a motion to dismiss the case. In its brief, BlackRock argues that the investment advisory fees charged by BlackRock to its funds are comparable to, or lower than, the advisory fee paid by shareholders to the funds in which BlackRock serves as a subadviser.
  • Plaintiffs File Consolidated Complaint
    On May 27, 2014, the plaintiffs in this consolidated action filed their complaint against BlackRock. The complaint alleges that the investment advisory fee rates charged to two BlackRock funds are as much as 106% higher than the rates negotiated at arm's length by BlackRock with other clients for the same or similar subadvisory services..

This docket consolidates the Clancy, Foote, Fox and Davidson subadviser cases against BlackRock in U.S. District Court for the District of New Jersey.  In general terms, these cases allege that BlackRock is charging investment advisory fees that are significantly higher than the fees it charges for the same or similar subadvisory services to other mutual funds.

 

As an example, the BlackRock Global Allocation Fund paid an effective investment advisory fee rate of 66 basis points (0.66%) in 2013.  At the same time, BlackRock provided subadvisory services to third-party mutual funds (using the same investment strategy) at between 32 and 44 basis points (0.32%-0.44%), or 50-106% less than what it was charging its own funds.

 

A second example is the BlackRock Equity Dividend Fund, which paid an effective advisory fee rate of 54 basis points (0.54%) in 2013.  During the same period, BlackRock charged between 27.5 and 35 basis points (0.275%-0.35%) for subadvisory services to third-party funds with the same investment objectives, or 54%-96% less than what it was charging its own funds. 

 

The plaintiffs filed their consolidated complaint on May 27, 2014, and the defendants filed a motion to dismiss the case on June 26, 2014.  The plaintiffs filed an opposition brief on July 25, 2014, and BlackRock filed its reply brief on August 11, 2014.

 

On March 27, 2015, the Court issued an opinion denying the BlackRock motion to dismiss.  The Court determined that the plaintiffs have pled sufficient facts about the advisory fees paid to BlackRock--and their relationship to the services rendered--to present a plausible claim that the fees are disproportionately large.

 

The consolidated case is now in discovery.

Document Title: 
Court Denies BlackRock Motion to Dismiss
Document Desc: 
On March 27, 2015, the District Court issued an opinion denying BlackRock's motion to dismiss the case. The Court found that the plaintiffs have met their burden to survive a motion to dismiss by pleading sufficient facts about the advisory fees paid to BlackRock--and their relationship to the services rendered--to present a plausible claim that the fees are disproportionately large.
Document Title: 
BlackRock Files Reply Brief
Document Desc: 
On August 11, 2014, BlackRock filed a reply brief on its motion to dismiss. In its brief, BlackRock argues that its advisory fees are lower than the advisory fees charged by the sponsors of the sub-advised funds mentioned in the complaint.
Document Title: 
Plaintiffs File Brief Opposing Motion to Dismiss
Document Desc: 
On July 25, 2014, the plaintiffs filed their brief in opposition to the motion to dismiss their case. The plaintiffs argue that there is a large disparity between the fees charged to BlackRock funds and to the funds it provides subadvisory services. This disparity cannot be explained by any difference in the investment advisory services provided.
Document Title: 
BlackRock Files Motion to Dismiss the Case
Document Desc: 
On June 26, 2014, BlackRock filed a motion to dismiss the case. In its brief, BlackRock argues that the investment advisory fees charged by BlackRock to its funds are comparable to, or lower than, the advisory fee paid by shareholders to the funds in which BlackRock serves as a subadviser.
Document Title: 
Plaintiffs File Consolidated Complaint
Document Desc: 
On May 27, 2014, the plaintiffs in this consolidated action filed their complaint against BlackRock. The complaint alleges that the investment advisory fee rates charged to two BlackRock funds are as much as 106% higher than the rates negotiated at arm's length by BlackRock with other clients for the same or similar subadvisory services..