Gallus, et al. v. Ameriprise Financial, Inc.
Plaintiffs in this shareholders' suit alleged that Analysis Group client Ameriprise Financial, Inc. – a mutual fund advisor to and distributor of RiverSource Investments – had charged excessive portfolio management fees under Section 36(b) of the Investment Company Act. Analysis Group Managing Principal Michael J. Quinn led a team including Vice Presidents Arindam Ghosh, Mike Holland, and Aaron C. Yeater, in supporting Analysis Group academic affiliate Professor Laura T. Starks and Dr. Ajay Khorana. Dr. Khorana examined industry competition, economies of scale, and specific components of fees among mutual fund advisors, while Professor Starks, a corporate governance expert, evaluated fund governance issues including the processes and documents used by the funds’ board of directors to set fees. Both experts were deposed, and filed reports with the Court.
The United States District Court for the District of Minnesota rejected the shareholders’ claims and granted summary judgment in favor of Ameriprise. In so ruling, Judge Donovan W. Frank opined that the plaintiffs’ argument “lack[ed] merit and fail[ed] to create a genuine issue of material fact.”
In 2009, the U.S. Court of Appeals for the Eighth Circuit reversed the district court’s dismissal, citing the standard set down in Gartenberg v. Merrill Lynch Asset Mgmt., Inc.
Subsequently, the District of Minnesota was asked to consider the impact of the United States Supreme Court’s March 2010 ruling in Jones v. Harris, in which the Court remanded that case to the Seventh Circuit. In December 2010, the district court reinstated its July 10, 2007 order granting summary judgment and re-entered judgment in favor of the defendants, represented by Robert Skinner and John Donovan, both partners with Ropes & Gray. Mr. Donovan had also argued Jones v. Harris before the Supreme Court.
Analysis Group has worked on several recent cases involving allegations of excessive fees by mutual funds.