(CN) – The Supreme Court on Tuesdsay unanimously ordered the 7th Circuit to reconsider a lawsuit that sought to reduce “excessive” fees on mutual funds. The high court said the circuit used the wrong standard when it tossed the lawsuit brought by investors against Harris Associates, an investment adviser, for charging excessive fees.”
In writing for the court, Justice Samuel Alito said the circuit should have made its decision using 1982’s Gartenberg v. Merrill Lynch Asset Management.
“The 7th Circuit erred in focusing on disclosure by investment advisers rather than the Gartenberg standard, which the panel rejected,” Alito wrote. “The standard may lack sharp analytical clarity, but … it has provided a workable standard for nearly three decades.”
A group of investors who own shares in several Oakmark funds sued Harris, claiming its fees were too high and in violation of the Investment Company Act.
A federal judge tossed the complaint, and the 7th Circuit agreed that plaintiffs didn’t prove that the fee were disproportionately high.