The fund scandal took a surprising turn Thursday when Alliance Capital Management, as expected, agreed to lower management fees on its funds as part of a landmark $600 million settlement that could set an alarming precedent.

Alliance will cut fees 20% and keep them frozen at that level for the next five years – a $350 million value – as part of its settlement with New York Attorney General Eliot Spitzer for engaging in abusive trading practices that ripped off long-term shareholders in its funds.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.