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In this video, Rob Skinner, Ropes & Gray
business & securities litigation partner, examines the decision
in AXA's excessive fee litigation, its impact on pending and
future 36(b) cases, and key takeaways from the AXA decision for
fund boards and advisors. In the AXA decision, the court rejected
the plaintiff's theory that advisory fees should be no higher
than the fees that the advisor pays sub-advisors to handle a
portion of the services provided to the funds. "The AXA case
reminds us that the best defense to this theory is a robust board
process, a fully informed board, and a candid discussion about
those services differentials and why it is that the advisory fee
and the sub-advisory fee are, of course, not the same," said
Mr. Skinner. While the AXA decision does not create any new law or
provide a checklist for boards to follow, it is a prime example of
how important a robust process combined with a fully informed board
can be in order for fees to "pass muster" in the event of
litigation, according to Mr. Skinner.
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