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An Empirical Study of Mutual Fund Excessive Fee Litigation: Do the Merits Matter?

Journal of Law, Economics and Organization, 2014, Forthcoming

54 Pages Posted: 4 Jun 2011 Last revised: 7 Oct 2016

Quinn Curtis

University of Virginia School of Law

John Morley

Yale Law School

Date Written: March 7, 2012

Abstract

Building on the U.S. Supreme Court’s recent decision in Jones v. Harris Associates, this paper presents the first comprehensive empirical study of mutual fund excessive fee liability under section 36(b) of the Investment Company Act. We use a hand-collected dataset of all excessive fee complaints filed between 2000 and 2009 to investigate several topics, including the relationship between fee levels and the odds that funds would be targeted by excessive fee suits, the relationship between fee levels and case outcomes, the relationship between excessive fee suits and subsequent fee changes, and the relationship between excessive fee suits and subsequent asset flows. Our most basic finding is that although fees had some ability to predict which funds would be targeted, the strongest predictor of targeting was family size: funds in larger families were much more likely to be targeted than funds in smaller families.

Keywords: mutual funds, securities litigation, mutual fund fees, empirical legal studies

JEL Classification: G18, G2, K22, K23

Suggested Citation

Curtis, Quinn and Morley, John, An Empirical Study of Mutual Fund Excessive Fee Litigation: Do the Merits Matter? (March 7, 2012). Journal of Law, Economics and Organization, 2014, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1852652 or http://dx.doi.org/10.2139/ssrn.1852652

Quinn Curtis (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

HOME PAGE: http://www.law.virginia.edu/lawweb/faculty.nsf/FHPbI/2298852

John Morley

Yale Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States
(203) 436-3527 (Phone)

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