After years of the court system siding with the mutual fund industry on the discrepancy between retail and institutional mutual fund fees, the case that the Supreme Court will hear this fall, Jerry N. Jones et al. v. Harris Associates, might be a watershed one for investors.
Judging from initial filing briefs filed on behalf of the plaintiff, including one from the Solicitor General acting on behalf of the
Fees that retail and institutional investors are set at arms length, rather than in a true bargaining process, Kagan wrote. However, she suggested that the case be sent back to the lower courts to decide whether the investors have presented sufficient evidence about the comparability of services.
Regardless of whether the case is heard by the Supreme Court or not, Kagans sympathetic stance goes against the ruling of Judge Frank Easterbrook of the Seventh U.S. Circuit Court of Appeals, who essentially said the investment advisor can charge whatever fees it likes as long as it doesnt involve fraud and as long as they are not excessive, as set by the Gartenberg standard.
In its brief, the