The Ninth Circuit Court of Appeals upheld the lower court’s decision in favor of Capital Research and Management (CRMC) in a suit brought by plaintiff shareholders claiming CRMC’s advisory fees were excessive. Plaintiffs had argued that CRMC had misused advisory fees earned from investment companies over the year, which amounted to over $6 billion. They further argued that the shareholders of the funds did not receive any benefits from the economies of scale realized by CRMC. The District Court had ruled that the plaintiffs failed to prove that the advisory fees charged by CRMC were so disproportionately large that they bore no reasonable relationship to the services rendered. In upholding the District Court’s ruling, the 9th circuit stated that the District Court had meticulously applied the Gartenberg standard for determining when fees are excessive.
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