|  | | 2010 News and Press Releases | | |
HEADLINE NEWS:
Spin or Win for Investment Industry in High Court Mutual Funds Case?
Tony Mauro
The National Law Journal. March 31, 2010
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EXCERPT: The investment industry declared victory Tuesday as the U.S. Supreme Court ruled in a closely watched case that investor advocates had hoped would make it easier to challenge high fees charged by advisers in the $9 trillion mutual fund business.
But industry critics also claimed a win in the case of Jones v. Harris Associates, asserting that the high court decision allows plaintiffs to use the kinds of fee comparisons that could help them prove that advisers' fees are excessive. "This is a tremendous victory for investors," said David Frederick of Washington's Kellogg, Huber, Hansen, Todd, Evans & Figel, who argued for the investors in the case before the Court. Frederick dismissed as "typical industry spin" the favorable comments made by the investment industry in the aftermath of Tuesday's ruling. When told about Frederick's comments about the case, his adversary, John Donovan Jr., said, "I'm a little surprised by that." Donovan, a partner at Ropes & Gray in Boston, represented Harris Associates L.P., a Chicago financial firm whose fees were at issue. "The Court sharply limited the role of the courts" in second-guessing advisers' fees, Donovan said, and did not open the door to litigation "one inch more." The disagreement over the meaning of Tuesday's decision likely foreshadows another wave of litigation over alleged excessive fees charged by investment advisers. Paul Stevens of the Investment Company Institute echoed Donovan's applause, saying the ruling "brings stability and certainty for mutual funds, their directors and almost 90 million investors by endorsing the long-standing framework under which courts consider claims of excessive fund advisory fees." […] Investors complain that too-close relationships between advisers and the mutual funds they create and handle have led to runaway fees unchecked by the Gartenberg standard. |
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