Court Grants Summary Judgment in Favor of Walsh Client

On October 10, 2018, Hon. William H. Walls, U.S.D.J. granted summary judgment to New York Life Investment Management LLC (“NYLIM”) on all claims in a suit challenging the reasonableness of the fees charged by NYLIM, the investment advisor and manager to four sub-advised mutual funds, under Section 36(b) of the Investment Company Act of 1940 (“ICA”).

In granting NYLIM summary judgment, the Court found that, as to two of the funds, Plaintiffs lacked standing.  As to the other two funds, the Court evaluated the six factors identified in Gartenberg to determine whether fees are excessive: the nature and quality of the service provided, the profitability of the fund to the adviser-manager, fall-out benefits, economies of scale, comparative fee structures, and the independence and conscientiousness of the trustees.  After weighing the evidence, the Court found that each Gartenberg factor weighed in NYLIM’s favor.  As such, the Court held that “no reasonable jury could conclude that NYLIM charges fees so disproportionately large that they bear no reasonable relationship to the services rendered and could not have been the product of arm’s length bargaining.”

Walsh attorneys Liza Walsh and Katelyn O’Reilly, and co-counsel James O. Fleckner, Katherine McKenney, David Rosenberg, and Gabrielle L. Gould of Goodwin Procter LLP represented NYLIM.

The case is Redus-Tarchis, et al. v. New York Life Investment Management LLC, case number 14-cv-7991, in the U.S. District Court for the District of New Jersey.

For more information, please contact Katelyn O’Reilly at (973)757-1100 or [email protected]