Kennis Trust v. First Eagle Investment Management LLC



Two shareholders in the First Eagle Global and Overseas Funds filed a lawsuit against First Eagle Investment Management on May 7, 2014, in U.S. District Court in Delaware. This lawsuit alleges that First Eagle is charging excessive advisory fees to these two Funds, compared to the fee levels it is charging to provide similar services as a subadviser to third-party mutual funds.

 

In its complaint, the plaintiffs allege that First Eagle is charging the Global and Overseas Funds an advisory fee rate of 75 basis points, when it is charging other funds a rate that is 25 to 37 basis points lower in providing subadvisory services. The plaintiffs alleged that First Eagle is breaching its fiduciary duty under Section 36(b) of the Investment Company Act and requests the recovery of any excessive fees to the Funds.

 

On July 14, 2014, First Eagle filed a motion to dismiss the complaint.  In its brief, First Eagle argues that the plaintiffs have not alleged sufficient facts that the funds' advisory fees are excessive.  The plaintiffs filed their opposition brief on September 11, 2014.

 

The motion to dismiss was referred to a Magistrate Judge who filed a report and recommendation on October 8, 2015.  The Report recommends that the motion to dismiss be denied, as the plaintiffs' complaint contains sufficiently specific factual allegations to meet the liberal pleading standard at this stage of the proceedings.

 

On December 9, 2015, the District Court accepted the Magistrate Judge's recommendation and denied First Eagle's motion to dismiss the case.  The Judge ruled that the plaintiffs met their burden of presenting sufficiently specific factual allegations to avoid a motion to dismiss. 

 

After discovery in the case and the death of one of the plaintiffs, the parties agreed to dismiss the case.  The Court accepted this voluntary dismissal on August 9, 2017.

  • Parties Agree to Dismiss the Case
    After discovery in the case and the death of one of the plaintiffs, the parties agreed to a stipulation dismissing the case. The Court accepted this voluntary dismissal on August 9, 2017.
  • District Court Denies First Eagle Motion to Dismiss
    On December 9, 2015, the District Court accepted the recommendation of the Magistrate Judge to deny the First Eagle motion to dismiss the case. The Court ruled that the plaintiffs have met their burden to avoid a motion to dismiss.
  • Magistrate Judge Issues Report and Recommendation
    On October 8, 2015, U.S. Magistrate Judge Sherry Fallon issued a Report and Recommendation on the Defendant's motion to dismiss the case. Judge Fallon recommended that the motion to dismiss be denied, as the plaintiffs' complaint contains sufficiently specific factual allegations to meet Rule 8's liberal pleading standard at this stage of the proceedings.
  • First Eagle Files Reply Brief
    On October 9, First Eagle filed its reply brief on its motion to dismiss the case. In its brief, First Eagle asserts that the plaintiffs' complaint is based on unfounded speculation and inadequate fee comparisons.
  • Plaintiffs File Opposition Brief
    On September 11, 2014, the plaintiffs filed their brief in opposition to the motion to dismiss. The plaintiffs' brief argues that the large disparity in fees charged to the First Eagle funds and the fees it charges to the sub-advised fund cannot be explained by any difference in providing investment advisory services.
  • First Eagle Files Motion to Dismiss the Case
    On July 14, 2014, First Eagle filed a motion to dismiss, arguing that the complaint contains insufficient factual allegations that the funds' advisory fees are outside the range that arm's length bargaining would produce.
  • Shareholders File Excessive Fee Lawusit Against First Eagle Investment Management
    On May 7, 2014, shareholders in the First Eagle Global and Overseas Funds filed a lawsuit against First Eagle Investment Management in U.S. District Court in Delaware. The complaint alleges that First Eagle is charging advisory fees to the Funds that are substantially higher than the fees it is charging in arm's length transactions to provide similar services to other mutual funds as a subadviser.

Two shareholders in the First Eagle Global and Overseas Funds filed a lawsuit against First Eagle Investment Management on May 7, 2014, in U.S. District Court in Delaware. This lawsuit alleges that First Eagle is charging excessive advisory fees to these two Funds, compared to the fee levels it is charging to provide similar services as a subadviser to third-party mutual funds.

 

In its complaint, the plaintiffs allege that First Eagle is charging the Global and Overseas Funds an advisory fee rate of 75 basis points, when it is charging other funds a rate that is 25 to 37 basis points lower in providing subadvisory services. The plaintiffs alleged that First Eagle is breaching its fiduciary duty under Section 36(b) of the Investment Company Act and requests the recovery of any excessive fees to the Funds.

 

On July 14, 2014, First Eagle filed a motion to dismiss the complaint.  In its brief, First Eagle argues that the plaintiffs have not alleged sufficient facts that the funds' advisory fees are excessive.  The plaintiffs filed their opposition brief on September 11, 2014.

 

The motion to dismiss was referred to a Magistrate Judge who filed a report and recommendation on October 8, 2015.  The Report recommends that the motion to dismiss be denied, as the plaintiffs' complaint contains sufficiently specific factual allegations to meet the liberal pleading standard at this stage of the proceedings.

 

On December 9, 2015, the District Court accepted the Magistrate Judge's recommendation and denied First Eagle's motion to dismiss the case.  The Judge ruled that the plaintiffs met their burden of presenting sufficiently specific factual allegations to avoid a motion to dismiss. 

 

After discovery in the case and the death of one of the plaintiffs, the parties agreed to dismiss the case.  The Court accepted this voluntary dismissal on August 9, 2017.

Document Title: 
Parties Agree to Dismiss the Case
Document Desc: 
After discovery in the case and the death of one of the plaintiffs, the parties agreed to a stipulation dismissing the case. The Court accepted this voluntary dismissal on August 9, 2017.
Document Title: 
District Court Denies First Eagle Motion to Dismiss
Document Desc: 
On December 9, 2015, the District Court accepted the recommendation of the Magistrate Judge to deny the First Eagle motion to dismiss the case. The Court ruled that the plaintiffs have met their burden to avoid a motion to dismiss.
Document Title: 
Magistrate Judge Issues Report and Recommendation
Document Desc: 
On October 8, 2015, U.S. Magistrate Judge Sherry Fallon issued a Report and Recommendation on the Defendant's motion to dismiss the case. Judge Fallon recommended that the motion to dismiss be denied, as the plaintiffs' complaint contains sufficiently specific factual allegations to meet Rule 8's liberal pleading standard at this stage of the proceedings.
Document Title: 
First Eagle Files Reply Brief
Document Desc: 
On October 9, First Eagle filed its reply brief on its motion to dismiss the case. In its brief, First Eagle asserts that the plaintiffs' complaint is based on unfounded speculation and inadequate fee comparisons.
Document Title: 
Plaintiffs File Opposition Brief
Document Desc: 
On September 11, 2014, the plaintiffs filed their brief in opposition to the motion to dismiss. The plaintiffs' brief argues that the large disparity in fees charged to the First Eagle funds and the fees it charges to the sub-advised fund cannot be explained by any difference in providing investment advisory services.
Document Title: 
First Eagle Files Motion to Dismiss the Case
Document Desc: 
On July 14, 2014, First Eagle filed a motion to dismiss, arguing that the complaint contains insufficient factual allegations that the funds' advisory fees are outside the range that arm's length bargaining would produce.
Document Title: 
Shareholders File Excessive Fee Lawusit Against First Eagle Investment Management
Document Desc: 
On May 7, 2014, shareholders in the First Eagle Global and Overseas Funds filed a lawsuit against First Eagle Investment Management in U.S. District Court in Delaware. The complaint alleges that First Eagle is charging advisory fees to the Funds that are substantially higher than the fees it is charging in arm's length transactions to provide similar services to other mutual funds as a subadviser.