A shareholder of American Funds' Europacific Growth Fund has filed suit against the fund group and parent company Capital Research and Management. Rachelle Korland lodged the complaint against the company on June 18 in the U.S. District Court of the Central District of Los Angeles for misuse of 12b-1 fees. The complaint also said that the 12b-1 Fees charged by American were "unlawfully excessive and disproportionate."

A spokeswoman for American funds told the MFWire, "We believe that the suit has no merit and we will vigorously fight it."

Two examples of 12b-1 fees being used for activities for which they were not "primarily intended", provided in the suit are: post-sale shareholder services provided by broker-dealers, such as operational activities and suitability reviews and funding to support the b-d maintaining a fund supermarket on its website containing thousands of other funds.

The suit also mentions that the 12b-1 fee is excessive because of the requirement that there be a reasonable likelihood that the fees will benefit the fund and its shareholders. The suit claims that any benefits of marketing the fund are miniscule and the benefits disproportionately go to the investment advisor.

American recently appealed the decisions of two Finra panels to the SEC in the matter of directed brokerage commissions. The company was accused of by FINRA in 2005 of directing more than $98 million in brokerage commissions between 2001 and 2003 to 46 securities firms. 

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