The U.S. Supreme Court will consider whether money managers can charge more to investors in their mutual funds than they do to third-party clients such as pension funds.
The court today said it would consider the case of Jones vs. Harris Associates, in which investors in Harris Oakmark mutual funds claim that Harris was getting excessive fees because it was charging them more to manage the mutual funds than to manage the pension funds.
U.S. District Court in Chicago rejected the lawsuit, and the U.S. Court of Appeals for the 7th Circuit in Chicago affirmed the lower courts decision.
Harris Associates charges a lower percentage of assets to other clients, but this does not imply that it must be charging too much to the Oakmark fund, said a three-member panel of the judges in a May 19, 2008, decision written by Chief Judge Frank Easterbrook. Different clients call for different commitments of time.
The Supreme Court will decide whether the Investment Company Act of 1940 bars the higher fees. Arguments in the case will be heard this fall.