The Eighth U.S. Circuit Court of Appeals has just ruled in favor of investors in a case against Ameriprise Financial over the fees of 11 of its RiverSource mutual funds. Coming on the heels of a similar case against Harris Associates that the Supreme Court will hear this fall, it could signal a new era in favor of investors.
This is the first indication of where courts will go with these cases, William Birdthistle, assistant professor of law at Chicago-Kent College of Law told The Wall Street Journal.
In the Ameriprise case, Gallus et al v. Ameriprise Financial, shareholders in 11 of the firms retail funds said they should not be charged higher fees than institutional clients. The court agreed with the plaintiffs that they were provided essentially the same services and advice as institutional clients.
In the Harris case, Jerry N. Jones et al v. Harris Associates, the Seventh Circuit agreed with a lower court on a standard that has been the norm for nearly 30 years, that the free market will determine that fees are not too high. But one judge dissented, saying the courts could compare fees in institutional and retail share classes of mutual funds.