The Investment Company Institute is violating federal securities laws by collecting membership fees from mutual funds while allowing the organization to be dominated by mutual fund advisory firms, according to a lawsuit two shareholders filed against the trade group last week.

Mutual fund executives control the ICI and influence it in ways that are adverse to fund shareholders at the same time that the ICI relies heavily on membership fees ultimately paid for by fund shareholders, the shareholders alleged. The shareholders - Linda Rohrbaugh of Brinklow, Md. and Richard Krantz of Garden City, N.Y. - alleged that the ICI's receipt of membership fees from funds while the organization is dominated by fund company executives represents a conflict of interest which hurts fund shareholders.

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.