February 6, 2023

Volume XIII, Number 37

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February 03, 2023

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Parties Stipulate to Dismissal of Last Pending Section 36(b) Excessive Fee Suit

On December 30, 2020, the parties to the last pending excessive fee suit brought against a mutual fund’s investment adviser under Section 36(b) of the Investment Company Act of 1940 submitted to the U.S. District Court for the District of Maryland a joint stipulation of dismissal with prejudice. On January 4, 2021, the court entered an order on the stipulation, resulting in the closure of the case. The litigation began in April 2016, when the plaintiffs, investors in eight mutual funds managed by T. Rowe Price Associates, Inc., filed a complaint in the U.S. District Court for the Northern District of California alleging that T. Rowe Price received excessive advisory fees from the funds in violation of the firm’s fiduciary duty because the firm provided substantially similar services for a lower fee as a sub-adviser to unaffiliated funds. The case was transferred to the Maryland District Court in August 2016, and claims with respect to one of the eight funds named in the original complaint were voluntarily dismissed in March 2018. In the stipulation, the parties stated that the dismissal of the suit was not the result of a settlement, compromise or payment of any consideration to the plaintiffs, and each side agreed to bear its own costs and attorneys’ fees.

Following the dismissal of this case, there are no Section 36(b) excessive fee suits currently pending in federal court.

The stipulation was submitted under the caption Zoidis v. T. Rowe Price Assocs., Inc., case no. 1:16-cv-02786-GLR.

© 2023 Vedder PriceNational Law Review, Volume XI, Number 33

About this Author

John Marten Investment Attorney Vedder Price Law FIrm

John S. Marten, a Shareholder in the Chicago office of Vedder Price, has substantial experience representing clients in the investment management industry.

As a member of the firm’s Investment Services group, Mr. Marten counsels clients on a wide variety of matters involving the application of the federal securities laws to investment companies, investment advisers and broker-dealers. He has significant experience counseling investment company clients with respect to new products and was recently involved in the creation of two mutual funds...

(312) 609 7753
Nathaniel Segal Investment Attorney Vedder Price Law Firm

Nathaniel Segal is counsel at Vedder Price and a member of the Investment Services group. He focuses his practice on investment companies and investment advisers in connection with the organization and operation of investment products and services, including traditional mutual funds, closed-end investment companies (including interval funds and listed closed-end funds), variable insurance products and registered hedge funds, as well as mutual funds utilizing complex hedging and absolute return strategies. Mr. Segal has experience in conducting transactional due diligence...

(312) 609 7747
Jacob Tiedt,Vedder Price law firm investment services attorney

Jacob C. Tiedt is a Shareholder at Vedder Price and a member of the Investment Services group.

Mr. Tiedt’s practice includes the representation of registered mutual funds, closed-end funds and exchange-traded funds; private funds; investment advisers; and other financial institutions on a broad range of regulatory, governance and compliance matters. Mr. Tiedt regularly counsels clients on matters relating to SEC registration, disclosure and compliance; shareholder solicitation; NYSE, Nasdaq and FINRA regulation; corporate governance; and board administration. Mr....