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By Jason Stipp | 03-31-2010 05:32 AM

Three Big Takeaways from the Fund Fee Case

Morningstar fund analyst Ryan Leggio on how investors should think about the Supreme Court's decision in the Jones v Harris case.

Jason Stipp: I'm Jason Stipp with Morningstar. The Supreme Court made a decision Wednesday in the Jones v. Harris case. This is a fund fee case involving the advisor to the Oakmark funds, in which some fundholders were very upset that they were being charged about twice as much as the Harris Associate institutional clients.

Morningstar's Ryan Leggio has been following this case for a while. He's here to tell us a little bit about what the decision means. Thanks for joining me, Ryan.

Ryan Leggio: Sure, Jason.

Stipp: So, give us just a quick rundown on exactly what the Supreme Court did decide yesterday, when they came out with their ruling.

Leggio: Sure. The Supreme Court officially decided in favor of the shareholders, so this case will go back down to district court where the shareholders will be able to try and prove that Harris charged them too much on fees. They affirmed what's known as the "Gartenberg Standard," which is a standard that's been in place for 25 years, which basically says that as long as the negotiations between the funds' advisor and the mutual fund boards are done in an arm's-length type of transaction, that the fund fees will stand.

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