Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:What Impact Will BlackRock Suit Have on Fees? Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, February 20, 2013

What Impact Will BlackRock Suit Have on Fees?

News summary by MFWire's editors

Earlier this month, two pension plans filed a suit in Tennessee federal court against BlackRock [profile] over the issue of securities lending.

What impact could this suit have on fund fees?

According to MarketWatch, "investor lawsuits typically face long odds in court, they add that this case may help clarify a controversial area of the ETF business, and perhaps spur changes that could help investors. For example, investor lawsuits in the 401(k) arena have recently led to greater disclosure and lower prices."

MarketWatch explains that the practice is question is called securities lending, in mutual funds and ETFs pay agents to help them lend out shares in their portfolios to Wall Street traders and earn interest. This can boost profits, according to MarketWatch, generating about $10 billion in annual revenue for mutual funds and other investment pools, estimates research firm Markit—as well as investor returns.

However, in the lawsuit filed last month in a U.S. District Court in Tennessee, the two pension funds argues not enough of that extra money is making it back into the hands of shareholders. BlackRock says it remits about two-thirds of the revenue it earns from securities lending to investors, while the rest goes to cover costs and boost the bottom line. The lawsuit—brought by the Laborers Local 265 and Pipefitters Local No. 572—says that is well below rivals like Vanguard, which passes all share-lending profits on to fund holders. The suit charges BlackRock with “self-dealing.”

MarketWatch quotes William Birdthistle, a law professor at the Illinois Institute of Technology who specializes in investment companies, as saying “You want sunlight."

“Lawsuits like this can provide an investor education,” Birdthistle tells MarketWatch.

Read more on this issue in MarketWatch.  

Edited by: Tommy Fernandez


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2024: Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2024
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use