Recent Significant Cases

Baker v. American Century Investments, No. 04-4039-CV-C-ODS (W.D. Mo. 2006)
We representated of American Century Investments in an action challenging over $1 billion in investment management fees paid by three of the largest American Century mutual funds during the period 2003–2006. Just one week before trial was to begin—after two-and-a-half years of litigation and after the parties filed their primary pre-trial submissions—plaintiffs agreed to dismiss the action with no settlement recovery or payment of attorneys fees. In the stipulation of dismissal, plaintiffs conceded that American Century would have prevailed on most of the disputed issues and that the court would have concluded that the challenged fees were fair and reasonable in light of the surrounding circumstances and did not constitute a violation of Section 36(b). The dismissal came after the court granted two pre-trial motions that eviscerated the plaintiffs’ case. The first severely limited the testimony of three of plaintiffs’ expert witnesses, and the other excluded all evidence concerning American Century’s separate accounts and subadvised funds, including the fees associated with those products.  Click here for more details.

In re Dreyfus Mutual Funds Fee Litigation, 2006 WL 909434 (W.D. Pa. 2006)
We represented Dreyfus in a class and derivative action asserting claims under the 1940 Act, the Investment Advisers Act, and state law based on allegations that it entered into improper revenue sharing agreements with broker-dealers to promote the sale of its mutual funds. We obtained dismissal of all of plaintiffs’ claims on motions to dismiss and for judgment on the pleadings. Click here for more details.

Gilliam v. Fidelity Management & Research Co., No. 04-11600 (D. Mass. 2006)
We represented Fidelity in an action asserting claims under the 1940 Act, the Investment Advisers Act, and state law based on allegations that it made undisclosed and improper payments to unaffiliated broker-dealers to promote the sale of Fidelity mutual funds.  After plaintiffs voluntarily dismissed their claims under the Investment Advisers Act and state law, the court granted our motion to dismiss the 1940 Act claims. Plaintiffs, however, chose not to do so and dismissed the action with prejudice. Click here for more details.

In re Salomon Smith Barney Mutual Fund Fees Litigation,
441 F. Supp. 2d 579 (S.D.N.Y. 2006)
We represent Citigroup Asset Management and related defendants in a class action involving claims under the 1933 Act, the 1934 Act, the 1940 Act, and state law based on an alleged scheme consisting of three components: (1) SSB offered undisclosed incentives to brokers and financial advisers to steer investors into SSB’s funds and other funds with which SSB had undisclosed kickback arrangements; (2) SSB extracted improper fees from investors in its proprietary funds; and (3) SSB caused its proprietary funds to invest in poorly performing companies because of their status as SSB investment banking clients. We successfully argued a motion to dismiss all of plaintiffs’ claims, although the court granted leave for plaintiffs to replead their claim under Section 36(b) of the 1940 Act as a derivative action. Click here for more details.

In re American Mutual Funds Fee Litigation, 2005 WL 3989803 (C.D. Cal. 2005)
We represent Capital Research in a class and derivative action asserting claims under the 1940 Act, the Investment Advisers Act, and state law based on allegations that it made undisclosed and improper payments to unaffiliated broker-dealers to promote the sale of American mutual funds. We successfully argued a motion to dismiss all of plaintiffs’ claims. Plaintiffs then filed an amended complaint asserting claims under Section 36(b) of the 1940 Act and the Sherman Act based on essentially the same allegations. Plaintiffs voluntarily dismissed their claim under the Sherman Act, and our motion to dismiss the Section 36(b) claim is pending. Click here for more details.

Ruehlman v. Capital Research, No. 04 MDL 15861 (D. Md.)
Milbank attorneys represented Capital Research in the consolidated litigation of the over 400 complaints that were filed against dozens of mutual fund investment advisers in the wake of New York Attorney General Eliot Spitzer’s investigation into alleged market timing and late trading arrangements between Canary Capital Partners LLC, a New Jersey-based hedge fund, and various investment advisers. The complaints assert claims under the 1940 Act, the 1933 Act, the 1934 Act, the Investment Advisers Act, and common law based on allegedly improper market timing and late trading in funds managed by defendants. In 2005, prior to the commencement of discovery, Milbank convinced plaintiffs’ counsel to voluntarily dismiss all of their claims against Capital Research with no settlement recovery.