The most recent lawsuit claiming that fund advisers keep too much of a fund’s advisory fee when an adviser hires a sub-adviser to make the investment decisions for the fund was filed earlier this month in Pennsylvania. The plaintiffs claim that the SEI Funds’ adviser retains “a substantial portion in fees that it charges the SEI Funds” despite the fact that sub-advisers make the investment decisions for the funds in violation of Section 36(b) of the 1940 Act. The suit alleges that in 2012, the SEI Funds Adviser retained just over $10 million of the $27 million in advisory fees paid by the funds in question. Plaintiffs further claim that the adviser did not pass along economies of scale to fund investors. Although no trustees are named in the suit, the plaintiffs claim that the Funds’ board did not “exercise the requisite care and conscientiousness in approving the fees paid” under the Funds’ advisory agreements.
Suits with similar claims have been brought against AXA, The Hartford, ING, The Principal, and Russell. Both AXA and The Hartford failed to have their cases dismissed.