Supreme Court Vacates Gallus Decision Which Required Comparison to Institutional Fees
In a summary disposition, the U.S. Supreme Court has vacated the decision in Ameriprise v. Gallus and remanded to the Eighth Circuit in light of the recent decision in Jones v. Harris Associates. The Eighth Circuit had held that Gartenberg required a comparison of mutual fund fees to those charged by institutional clients. In the Jones decision, the Court opined that such a comparison was not necessarily required because different fees may be justified by “greater frequency of shareholder redemptions in a mutual fund, the higher turnover of mutual fund assets, the more burdensome regulatory and legal obligations, and higher marketing costs.”
OUR TAKE: The Supreme Court’s disposition of Gallus indicates that the Supreme Court wants courts to stick closely to the Gartenberg standard and not give plaintiffs much leeway.