New York Attorney General Eliot Spitzer, in a repeat of his 2004 rule, plans to force some mutual fund firms to cut fees to obtain compensation for alleged past overcharging, according BusinessWeek.
Spitzer alleged that small investors are paying $10 billion a year too much in management fees. But, for decades courts have given the $8 trillion mutual fund industry a pass on setting fees by finding that charges were not excessive. No investor has ever persuaded a judge to force a fund to roll back its fees. Most suits are dismissed before trial because the companies argue that their fees are in line with other companies.
Recently, though, federal judges have turned down the motion to dismiss the case against Franklin Resources and the suits are now headed to trial. If a precedent is set, it could make some fund companies shudder.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.