North Valley GI Medical Group v. Prudential Investments



 

Several shareholders filed a federal lawsuit on October 30, 2015, alleging that Prudential Investments is charging excessive advisory fees for six of its captive mutual funds.  The lawsuit was filed in U.S. District Court in Maryland.

 

The complaint states that, in the past year, Prudential has charged its shareholders more than $201 million in fees for advisory services to these six mutual funds.  Prudential then delegated investment advisory services to several sub-advisers, paying them about 50% ($98.7 million) of what it is charging for nearly identical services to these funds.

  

Prudential filed a motion to dismiss the case on January 27, 2016.  The plaintiffs filed a response on April 20.  The District Court denied the motion to dismiss on August 23, 2016.

 

Several shareholders filed a federal lawsuit on October 30, 2015, alleging that Prudential Investments is charging excessive advisory fees for six of its captive mutual funds.  The lawsuit was filed in U.S. District Court in Maryland.

 

The complaint states that, in the past year, Prudential has charged its shareholders more than $201 million in fees for advisory services to these six mutual funds.  Prudential then delegated investment advisory services to several sub-advisers, paying them about 50% ($98.7 million) of what it is charging for nearly identical services to these funds.

  

Prudential filed a motion to dismiss the case on January 27, 2016.  The plaintiffs filed a response on April 20.  The District Court denied the motion to dismiss on August 23, 2016.

Document Title: 
District Court Denies Prudential Motion to Dismiss
Document Desc: 
On August 23, 2016, the District Court denied Prudential's motion to dismiss the case.
Document Title: 
Prudential Reply Brief
Document Desc: 
Prudential filed a reply brief on May 24, 2016. Prudential states in its reply brief that the plaintiffs fail to show that Prudential's management fees are outside the normal range of advisory fees.
Document Title: 
Plaintiffs Response to Motion to Dismiss
Document Desc: 
The plaintiffs filed a brief in opposition to the motion to dismiss on April 20, 2016. The plaintiffs state that "every single district court to recently consider similar sub-adviser allegations ... has found them to satisfy the applicable pleading standard and largely denied the investment advisers' motions to dismiss."
Document Title: 
Prudential Motion to Dismiss
Document Desc: 
Prudential filed a motion to dismiss the case on January 29, 2016. Prudential alleges that the plaintiffs have not pled facts in their complaint showing that the advisory fees are outside the range that could have been produced by "arm's-length bargaining."
Document Title: 
Excessive Fee Complaint Filed Against Prudential Investments
Document Desc: 
On October 30, 2015, several shareholders filed an excessive fee complaint against Prudential Investments, alleging that it is overcharging for advisory services in circumstances where it has delegated portfolio responsibilities to sub-advisers for 50% of the cost of providing these services.