Dueling Legal Minds Could Give Oakmark Fee Case a New Life
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Monday, August 18, 2008

Dueling Legal Minds Could Give Oakmark Fee Case a New Life

A legal feud brewing over the recent decision (see MFWire May, 21, 2008) in the fee case against Harris Associates' Oakmark Funds could help the case get heard in the Supreme Court.

The New York Times reports that the decision by circuit court judge, Frank H. Easterbrook is being criticized by his longtime idealogical partner, judge Richard A. Posner. Posner's dissent could help the plaintiff's lawyers in a bid to get the case heard by the Supreme Court.

In his decision on the case in May, Easterbrook said that mutual fund fees should not be capped: "The trustees (and in the end investors, who vote with their feet and dollars), rather than a judge or jury, determine how much advisory services are worth."

But in comments issued last week, Posner expressed a different view. "Competition in product and capital markets canít be counted on to solve the problem because the same structure of incentives operates on all large corporations and similar entities, including mutual funds."

Posner added that the mutual funds are a part of the financial services industry where "abuses have always been rampant."

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