On August 25, 2016, after a 25-day non-jury trial, Judge Peter Sheridan of the United States District Court of New Jersey issued a 159-page opinion in favor of Blank Rome’s client AXA Equitable Funds Management Group and AXA Equitable Insurance Company (“AXA”) dismissing with prejudice all of Plaintiffs’ claims under the §36(b) of the Investment Company Act of 1940. Blank Rome served as co-counsel with Milbank, Tweed, Hadley & McCloy LLP.
Plaintiffs brought this action on behalf of mutual fund investors who are contract holders to variable annuity products with AXA. Plaintiffs alleged that the Board of Trustees, who was charged with overseeing the mutual funds, breached its fiduciary duty by approving service contracts that charged excessive management and administrative fees. Plaintiffs’ damage claim was in excess of $550 million and a finding in favor of Plaintiffs would have resulted in a complete alteration of AXA’s fee structure. The case was closely watched within the mutual fund industry, due in part to Plaintiffs’ challenge to AXA’s use of “manager of managers” structure, which is common throughout the industry and the subject of a number of other pending lawsuits. The Court held that Plaintiffs failed to meet their burden to demonstrate that AXA breached their fiduciary duty or show any actual damages.
The Blank Rome team was led by Jonathan Korn with assistance from Jaime Nucifora. A copy of the decision can be reviewed here.