(June 19 – 11:10 ET) – The institutional paper Fund Action is reporting that a U.S. Federal court has given an investor suing fund giant Fidelity Management & Research Co. the right to examine its files.
Richard Kranz is suing Fidelity, accusing it of not passing its economies of scale to unitholders with reduced management fees. Kranz and his lawyers will now have the ability to examine Fidelity’s files for evidence with the hope of building a case worthy of trial.
The article quotes an unnamed Fidelity spokesperson as saying, “We continue to believe that the suit has no merit and the process of discovery will demonstrate that we have very committed and conscientious directors who have worked hard to ensure that the funds have fair and equitable fees.”
Kranz sought access to Fidelity files on the basis that as a private company some information to prove his case is unavailable. The judge reportedly noted the court was given no reason to disbelieve this claim, it also noted that “between 1985 and 1995, when assets in Fidelity funds were rising sharply, so was Fidelity’s management fee as a percentage of those assets.”
-IE Staff