2 Legal Decisions Affecting Mutual Funds
The subjects--fees and fiduciary duties.
Judges and I are complements. They don’t understand much about investments, and I understand even less about the law. Unfortunately for them, their job requires them to attempt expertise for the subject that they do not know, whereas my column does not. (That hasn’t prevented me from making such errors in the past, but I will endeavor not to do so today.)
Once again, the legal system’s views on mutual funds have me shaking my head. Earlier this month, a U.S. district court dismissed an excessive-fee lawsuit against J.P. Morgan. The plaintiffs’ failure was not surprising, although it arrived relatively quickly, through summary judgment. Outside 401(k)s, which are governed by different rules (ERISA), fee lawsuits always lose. The court’s logic, though, was ... puzzling.