Who's responsible for mutual fund overcharges?

A case before the Supreme Court will determine if investors can blame a mutual fund’s advisors for charging too much for fees, or if it’s the investors fault for paying them, writes Janet Paskin for SmartMoney.

The 1970 law that established a fiduciary standard for advisors also gave shareholders the right to sue if that standard wasn’t met.

“Over time, that fiduciary standard has been interpreted very broadly,” Paskin writes. “In general, courts have judged a fee too high if it is ‘so disproportionately large that it bears no reasonable relationship to the services tendered.’ In other words, all a fund’s advisor has to do is justify his fees.” Such a justification isn’t that hard, though. “Shareholders have tried to sue their funds more than three dozen times since the law was passed, and they’ve never won.”