Sivolella 36(b) Excessive Fee Case: First to Trial Since 2009
Tuesday, February 9, 2016

The trial phase of Sivolella v. AXA Equitable Life Insurance Co., originally filed in 2011 and the first Section 36(b) “excessive fee” case to proceed to trial since 2009, has commenced in the U.S. District Court, District of New Jersey, before Judge Peter G. Sheridan. Section 36(b) of the 1940 Act imposes a “fiduciary duty [on investment advisers] with respect to the receipt of compensation for services” and provides shareholders with a private right of action to enforce this obligation by seeking judicial review of fees charged by investment advisers under a breach of fiduciary duty standard. In Sivolella, the plaintiffs, variable annuity program participants for which the separate account invested in EQ Advisors Trust funds, alleged that the investment adviser’s fees were excessive because it delegated virtually all of its duties to sub-advisers and sub-administrators, but retained a disproportionate amount of the total advisory fees paid by the funds. The non-jury trial is expected to last into February.

 

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