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Fund Fees Get Their Day in the Highest Court

Monday's Supreme Court session on a controversial fee case could affect expense ratios.

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It's crunch time for a key legal case that could have broad ramifications for mutual fund fees and governance.

On Monday the Supreme Court will hear oral arguments in Jones v. Harris Associates. On one side will be mutual fund shareholders (Jones) arguing that Harris Associates, the advisor to the Oakmark Funds, violated its fiduciary duty and federal law by charging unreasonable fees. On the other, Harris will contend their fees were permissible and fair.

Monday's disputations and the court's ultimate ruling, which won't be rendered until next year, matter to more than just Oakmark shareholders. They will throw a spotlight on fund fees and on the debate over whether market competition--if it truly exists in the fund industry--is enough to regulate retail fund fees. They will also draw attention to fund boards and their effectiveness in policing fees.

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Ryan Leggio does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.