A federal appeals court judge ruled on Monday that courts should not cap fees for mutual fund advisers in a decision that could change the way such fees are regulated.
In his decision in Jones v. Harris Associates, in which several investors accused the fund adviser of deceiving investors and receiving excessive compensation, Judge Frank Easterbrook of the 7th U.S. Circuit Court of Appeals in Chicago said courts should play no part in determining whether fees for mutual fund advisers are reasonable. Market forces guarantee fees will be fair, Easterbrook wrote, and investors will leave a fund if advisers are getting paid too much.
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