The Investment Company Institute of Washington D.C., filed a motion July 28 to dismiss a complaint against it alleging the industry association has violated federal securities laws by aligning too closely with fund advisers, according to the motion.
"... these are novel and frivolous claims, apparently aimed at retaliating against the Institute for speaking out on issues in which plaintiffs' counsel have a pecuniary interest," states the motion. "This frivolous litigation - which seeks desperately to jam a square peg into a round hole - should be dismissed."
Because it is a trade organization and not an affiliate of either fund companies or advisers, the ICI is not subject to the Investment Company Act, according to the motion. Even if it were, the plaintiffs do not have the authority to file a complaint against the ICI, the motion claims.
Linda B. Rohrbaugh and Richard Krantz, the plaintiffs in the case, claim that the ICI is operated and controlled by a majority of investment advisers, thereby making the organization an affiliate of those advisers. The complaint contends that the ICI receives more than 50 percent of its funding from fees paid by fund companies, and that as an affiliate of an adviser, it is prohibited from doing so.
The lawsuit seeks repayment of all fees paid to the ICI by fund companies and seeks to halt future payments, according to the complaint.