Baker v. American Century Investment Management

In a mutual fund excessive fee action, Analysis Group and its academic affiliates, R. Glenn Hubbard and Peter Tufano, were retained by Milbank, Tweed, Hadley & McCloy LLP to provide consulting and expert witness services on behalf of American Century. The case concerned allegations that American Century charged excessive management fees (totaling more than $1 billion over three years) to three of its largest mutual funds in violation of Section 36(b) of the Investment Company Act of 1940. The plaintiffs' action challenged more than $1 billion in fees paid by the funds from March 2003 through July 2006.

Professor Hubbard conducted research and provided deposition testimony regarding competition in the mutual fund industry and plaintiff allegations that the fees American Century charged its retail mutual fund clients were not consistent with a competitive marketplace. Professor Tufano provided analysis and testimony regarding economies of scale at American Century. Together, their work revealed several fundamental flaws in the plaintiffs' theories and expert analyses. 

One week before the case was scheduled to go to trial, plaintiffs stipulated with prejudice to the dismissal of the action, stating "it is likely that the Defendant will prevail on most of [the relevant] issues," and that "if the case were tried, the Court would likely determine that the compensation Defendant received for managing the Funds was fair and reasonable. Therefore, Plaintiffs have concluded that the Defendant has not violated its fiduciary duties under Section 36(b) of the Investment Company Act of 1940." The court ordered the case dismissed with prejudice.

Managing Principal Mark Egland led the Analysis Group case team, which included President and CEO Martha Samuelson, Managing Principal Lee Heavner, Senior Advisor Michael Quinn, Vice President Michael Holland, and affiliate Stanley Ornstein.