Mutual Fund Ruling May Make Fee Challenges More Difficult

Law360 (September 30, 2019, 4:30 PM EDT) -- Since 1970, when Congress amended the Investment Company Act of 1940 to add Section 36(b) and provide fund shareholders with a private right of action against fund advisers for charging excessive fees, more than 100 such suits have been filed.

While the specific theories of liability have varied over the years, all rely to one degree or another on a common theme: Advisers dominate the funds they advise and set their fees largely unchecked by independent directors or any other force. Despite the pervasiveness of this theme in 36(b) cases, plaintiffs have consistently failed to muster evidence to support the notion...

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