In addition to the $250 million fine Alliance Capital Holdings LLP
is expected to pay to settle allegations of improper mutual fund trading at the firm, the Wall Street Journal reports that the company plans to slice its mutual fund management fees by 20% for the next five years, saving investors $350 million dollars.
Alliance's fine, negotiated with New York Attorney General Eliot Spitzer's office, would be the largest fine levied against a mutual fund company to date. Decisions on the terms of the settlement are expected to be made public this week.
According to fund tracker Lipper Inc., Alliance currently charges investors in the company's stock and bond funds an average of 0.58% of assets in management fees reports the WSJ. Its stock funds, which make up the bulk of the firm's mutual-fund business, charge an average of about 0.77%.
After a 20% reduction, investors would pay an average fees of 0.46% at Alliance and just under 0.62% on its stock funds. These reductions would put Alliance's fees just below the average mutual fund fee management fee, 0.53% and 0.65% on stock funds, as measured by Lipper.
Stay ahead of the news ... Sign up for our email alerts now