The U.S. Supreme Court announced its unanimous ruling in Jones v. Harris Associates LP a few weeks ago.
The 2004 case involved a lawsuit by investors against Harris Associates LP, adviser to the Oakmark Funds. The suit alleged that Harris was charging retail investors double what the firm charged institutional investors for the same services; that, the plaintiffs claimed, was a violation of the adviser’s fiduciary duty.
The court’s decision is seen as favorable for fund companies, although some observers believe it could lead to more lawsuits over fees and possibly lower fees.
The Investment Company Institute (ICI) has compiled an extensive resource page on the case, its outcome, and possible implications.
ICI President and CEO Paul Schott Stevens issued the following statement:
“The Supreme Court’s unanimous decision brings stability and certainty for mutual funds, their directors, and almost 90 million investors, by endorsing the Gartenberg standard under which courts have long considered claims of excessive fund advisory fees. This standard has well served the interests of funds and fund shareholders, who have seen their cost of investing fall by half in the last 20 years.”
Key excerpts from the Court’s opinion, according to the ICI, include the following: