Monday, March 16, 2009

Overheard @: Supreme Court to hear case on 401(k) fees

Stay tuned plan sponsors and providers. Fresh off the news that Sen. Herb Kohl (D-Wis.) was taking up legislation on 401(k) fees, here is more legal froth on fees reported by colleagues at EBN sister publication Money Management Executive:

Last year, the U.S. Court of Appeals for the Seventh Circuit ruled that a case three investors in Oakmark Funds had brought over what they alleged to be excessive fees failed to meet the burden of proof, setting an important precedent that protected fund firms against such cases.

But now, the U.S. Supreme Court will hear the case to determine whether the case set too high a bar.

The investors said Oakmark should charge retail investors the same lower fees that it charges institutional investors, arguing that it provides the same services to both investor classes. The investors further charged that as the firm’s assets rose, Oakmark failed to pass along economies of scale. But Oakmark, and other fund companies in the past, countered that retail investors demand more services than institutional investors.

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