Kennis v. Metropolitan West Asset Management



On October 16, 2015, a shareholder in the Metropolitan West Total Return Bond Fund filed a lawsuit in U.S. District Court for the Central District of California against Metropolitan West Asset Management for excessive advisory fees.

 

The complaint alleges that Metropolitan West charges a significantly higher advisory fee to this captive mutual fund than it charges for subadvisory services to unaffiliated mutual funds.  As examples, the complaint cites three unaffiliated funds that were charged between $22 million and $80 million for subadvisory services during the same year the Total Return Bond Fund was charged $140 million in advisory fees.

 

On December 18, 2015, Metropolitan West filed a motion to dismiss the case.  The plaintiff responded in February 2016.  The Court issued a tentative order on April 25, 2016, denying the defendant's motion to dismiss.  After supplemental filings, the Court confirmed its decision to deny the motion to dismiss on June 16, 2016. 

 

After the first phase of discovery was completed, Metropolitan West filed a motion for summary judgment.  The Court denied this motion is a series of three rulings issued on June 5, 2017; September 11, 2017; and September 22, 2017.

  • Court Issues Third Ruling on Summary Judgment Motion
    On September 22, 2017, the Court issued its third and final decision denying the Metropolitan West motion for summary judgment. The Court adopted its earlier rulings on June 5 and September 11. It also clarified that the advisory and subadvisory fee comparisons being made by the plaintiff are relevant and part of the Gartenberg factors to be considered by the Court in any final decision on the merits.
  • Court Issues Second Tentative Ruling on Summary Judgment Motion
    On September 11, 2017, the Court issued a second tentative ruling on the Metropolitan West motion for summary judgment. In this ruling, the Court agreed with the plaintiff that advisory fees and sub-advisory fees may be compared on similar facts, under the Supreme Court's decision in Jones v. Harris Associates.
  • Court Issues Tentative Ruling on Summary Judgment Motion
    After the first phase of discovery, Metropolitan West filed a motion for summary judgment. On June 5, 2017, the Court issued a tentative ruling denying this motion. The Court stated its agreement with the plaintiff that numerous factual disputes remain as to the nature of the services provided to the fund in exchange for the advisory fee.
  • District Court Denies Motion to Dismiss
    On June 16, 2016, the District Court denied Metropolitan West's motion to dismiss the case.
  • Metropolitan West Files Reply Brief
    Metwest states in its reply brief, filed on March 1, 2016, that "law and logic ... conspire to confirm that the complaint does not state a cognizable claim."
  • Plaintiff Files Opposition Brief
    On February 16, 2016, the plaintiff responded with an opposition brief stating that the defendant is clearly charging advisory fees to the fund that are outside the range of what could be negotiated at arm's length.
  • Metropolitan West Files Motion to Dismiss
    Metropolitan West filed a motion to dismiss the case on December 18, 2015. The adviser alleges that the complaint is "devoid of facts showing that MetWest's advisory fee is outside the range of what could have been bargained at arm's length."
  • Shareholder Files Excessive Advisory Fee Complaint Against Metropolitan West Asset Management
    On October 16, 2015, a shareholder in the Metropolitan West Total Return Bond Fund filed a lawsuit in federal court against Metropolitan West Asset Management for excessive advisory fees.

On October 16, 2015, a shareholder in the Metropolitan West Total Return Bond Fund filed a lawsuit in U.S. District Court for the Central District of California against Metropolitan West Asset Management for excessive advisory fees.

 

The complaint alleges that Metropolitan West charges a significantly higher advisory fee to this captive mutual fund than it charges for subadvisory services to unaffiliated mutual funds.  As examples, the complaint cites three unaffiliated funds that were charged between $22 million and $80 million for subadvisory services during the same year the Total Return Bond Fund was charged $140 million in advisory fees.

 

On December 18, 2015, Metropolitan West filed a motion to dismiss the case.  The plaintiff responded in February 2016.  The Court issued a tentative order on April 25, 2016, denying the defendant's motion to dismiss.  After supplemental filings, the Court confirmed its decision to deny the motion to dismiss on June 16, 2016. 

 

After the first phase of discovery was completed, Metropolitan West filed a motion for summary judgment.  The Court denied this motion is a series of three rulings issued on June 5, 2017; September 11, 2017; and September 22, 2017.

Document Title: 
Court Issues Third Ruling on Summary Judgment Motion
Document Desc: 
On September 22, 2017, the Court issued its third and final decision denying the Metropolitan West motion for summary judgment. The Court adopted its earlier rulings on June 5 and September 11. It also clarified that the advisory and subadvisory fee comparisons being made by the plaintiff are relevant and part of the Gartenberg factors to be considered by the Court in any final decision on the merits.
Document Title: 
Court Issues Second Tentative Ruling on Summary Judgment Motion
Document Desc: 
On September 11, 2017, the Court issued a second tentative ruling on the Metropolitan West motion for summary judgment. In this ruling, the Court agreed with the plaintiff that advisory fees and sub-advisory fees may be compared on similar facts, under the Supreme Court's decision in Jones v. Harris Associates.
Document Title: 
Court Issues Tentative Ruling on Summary Judgment Motion
Document Desc: 
After the first phase of discovery, Metropolitan West filed a motion for summary judgment. On June 5, 2017, the Court issued a tentative ruling denying this motion. The Court stated its agreement with the plaintiff that numerous factual disputes remain as to the nature of the services provided to the fund in exchange for the advisory fee.
Document Title: 
District Court Denies Motion to Dismiss
Document Desc: 
On June 16, 2016, the District Court denied Metropolitan West's motion to dismiss the case.
Document Title: 
Metropolitan West Files Reply Brief
Document Desc: 
Metwest states in its reply brief, filed on March 1, 2016, that "law and logic ... conspire to confirm that the complaint does not state a cognizable claim."
Document Title: 
Plaintiff Files Opposition Brief
Document Desc: 
On February 16, 2016, the plaintiff responded with an opposition brief stating that the defendant is clearly charging advisory fees to the fund that are outside the range of what could be negotiated at arm's length.
Document Title: 
Metropolitan West Files Motion to Dismiss
Document Desc: 
Metropolitan West filed a motion to dismiss the case on December 18, 2015. The adviser alleges that the complaint is "devoid of facts showing that MetWest's advisory fee is outside the range of what could have been bargained at arm's length."
Document Title: 
Shareholder Files Excessive Advisory Fee Complaint Against Metropolitan West Asset Management
Document Desc: 
On October 16, 2015, a shareholder in the Metropolitan West Total Return Bond Fund filed a lawsuit in federal court against Metropolitan West Asset Management for excessive advisory fees.