Obeslo v. Great-West Capital Management LLC

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On January 29, 2016, three shareholders in the Great-West Funds filed a 36(b) excessive fee lawsuit against Great-West Capital Management in U.S. District Court for the District of Colorado.

 

The plaintiffs' complaint alleges that Great-West retained more than two-thirds of its advisory fees for 21 retail mutual funds, while delegating substantially all of the investment advisory services to third-party sub-advisers.

 

As an example, Great-West collected $25.3 million in advisory fees for four index funds in 2014.  Great-West then paid approximately $973,000 to sub-advisers to provide the actual advisory services, while retaining $24.3 million to supervise the sub-advisers.  During the same year, Great-West received $73.6 million in advisory fees for 17 mutual funds that are actively managed.  Great-West paid $24.7 million in fees to multiple sub-advisers and retained $48.9 million to supervise the sub-advisers.

 

On May 2, 2016, Great-West filed a motion to dismiss the case.  The plaintiffs responded with an opposition brief and Great-West filed a reply brief.

 

The case is in discovery while the motion to dismiss is pending.  On April 3, 2017, the plaintiffs filed a second amended complaint.

 

 

  • Plaintiffs File Second Amended Complaint
    On April 3, 2017, the plaintiffs filed a second amended complaint.
    application/pdf iconObeslo v. Great-West Cap. Mgmt - Second Amended Complaint 4-3-2017.pdf
  • Great-West Files Reply Brief
    On June 24, 2016, Great-West filed its reply brief. Great-West argues that the plaintiffs cannot bring claims on behalf of Great-West funds that they do not own and the complaint filed by the plaintiffs does not state a plausible claim for relief.
    application/pdf iconObeslo v. Great-West Cap. Mgmt - GW Reply Brief 6-24-2016.pdf
  • Plaintiffs File Opposition Brief
    On June 10, 2016, the plaintiffs filed a brief in opposition to the motion to dismiss. The plaintiffs state that Great-West does not actually provide investment management services to the funds, but instead hires others to do so. Great-West is responsible for minor supervision over the advisory services to the funds, yet it retains the vast majority of the fees for itself.
    application/pdf iconObeslo v. Great-West Cap. Mgmt - Plaintiffs Opp. Brief 6-10-2016.pdf
  • Great-West Files Motion to Dismiss
    On May 2, 2016, Great-West filed a motion to dismiss the case. Great-West states that the complaint does not allege the elements of a claim against any one fund. Instead, the plaintiffs are using "group pleading" allegations that apply to many different funds.
    application/pdf iconObeslo v. Great-West Cap. Mgmt - Motion to Dismiss 5-2-2016.pdf
  • Shareholders File Excessive Fee Complaint Against Great-West Capital Management
    On January 29, 2016, three shareholders filed an excessive fee complaint against Great-West Capital Management. The complaint alleges that Great-West retained more than two-thirds of the advisory fees it collected while delegating substantially all of its investment advisory services to third-party sub-advisers.
    application/pdf iconObeslo v. Great-West Cap. Mgmt - Complaint 1-29-2016.pdf
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On January 29, 2016, three shareholders in the Great-West Funds filed a 36(b) excessive fee lawsuit against Great-West Capital Management in U.S. District Court for the District of Colorado.

 

The plaintiffs' complaint alleges that Great-West retained more than two-thirds of its advisory fees for 21 retail mutual funds, while delegating substantially all of the investment advisory services to third-party sub-advisers.

 

As an example, Great-West collected $25.3 million in advisory fees for four index funds in 2014.  Great-West then paid approximately $973,000 to sub-advisers to provide the actual advisory services, while retaining $24.3 million to supervise the sub-advisers.  During the same year, Great-West received $73.6 million in advisory fees for 17 mutual funds that are actively managed.  Great-West paid $24.7 million in fees to multiple sub-advisers and retained $48.9 million to supervise the sub-advisers.

 

On May 2, 2016, Great-West filed a motion to dismiss the case.  The plaintiffs responded with an opposition brief and Great-West filed a reply brief.

 

The case is in discovery while the motion to dismiss is pending.  On April 3, 2017, the plaintiffs filed a second amended complaint.

 

 

Document Title: 
Plaintiffs File Second Amended Complaint
Document Desc: 
On April 3, 2017, the plaintiffs filed a second amended complaint.
Upload Document: 
application/pdf iconObeslo v. Great-West Cap. Mgmt - Second Amended Complaint 4-3-2017.pdf
Document Title: 
Great-West Files Reply Brief
Document Desc: 
On June 24, 2016, Great-West filed its reply brief. Great-West argues that the plaintiffs cannot bring claims on behalf of Great-West funds that they do not own and the complaint filed by the plaintiffs does not state a plausible claim for relief.
Upload Document: 
application/pdf iconObeslo v. Great-West Cap. Mgmt - GW Reply Brief 6-24-2016.pdf
Document Title: 
Plaintiffs File Opposition Brief
Document Desc: 
On June 10, 2016, the plaintiffs filed a brief in opposition to the motion to dismiss. The plaintiffs state that Great-West does not actually provide investment management services to the funds, but instead hires others to do so. Great-West is responsible for minor supervision over the advisory services to the funds, yet it retains the vast majority of the fees for itself.
Upload Document: 
application/pdf iconObeslo v. Great-West Cap. Mgmt - Plaintiffs Opp. Brief 6-10-2016.pdf
Document Title: 
Great-West Files Motion to Dismiss
Document Desc: 
On May 2, 2016, Great-West filed a motion to dismiss the case. Great-West states that the complaint does not allege the elements of a claim against any one fund. Instead, the plaintiffs are using "group pleading" allegations that apply to many different funds.
Upload Document: 
application/pdf iconObeslo v. Great-West Cap. Mgmt - Motion to Dismiss 5-2-2016.pdf
Document Title: 
Shareholders File Excessive Fee Complaint Against Great-West Capital Management
Document Desc: 
On January 29, 2016, three shareholders filed an excessive fee complaint against Great-West Capital Management. The complaint alleges that Great-West retained more than two-thirds of the advisory fees it collected while delegating substantially all of its investment advisory services to third-party sub-advisers.
Upload Document: 
application/pdf iconObeslo v. Great-West Cap. Mgmt - Complaint 1-29-2016.pdf
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