Federal Court Issues Trial Ruling in Section 36(b) “Manager of Managers” Lawsuit: AXA Advisory and Administrative Fees Held Not to Constitute a Breach of Fiduciary Duty

September 19, 2016

The U.S. District Court for the District of New Jersey issued its post-trial ruling on August 25, 2016 in Sivolella v. AXA Equitable Life Insurance Company—the first Section 36(b) trial decision since 2009. The Court concluded that Plaintiffs had failed to meet their burden to show that two AXA entities breached their fiduciary duty under Section 36(b) by charging excessive advisory and administrative fees to 12 AXA-sponsored mutual funds. The lengthy opinion highlights the heavy burden plaintiffs face in Section 36(b) cases. It also serves as a reminder of the importance of witness expertise and credibility. Finally, as the first Section 36(b) case to go to trial following the Supreme Court’s decision in Jones v. Harris Associates, L.P., and the first trial of the “manager of managers” theory of liability, the AXA case has the potential to influence a number of the pending mutual fund “excessive fee” cases around the country.

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