The Hartford [profile] isn't free of an excessive-fee suit just yet.

A lawsuit filed last year alleging that Hartford Investment Financial Services (HIFSCO) charged excessive management and distribution fees on six mutual funds has been partially dismissed by a U.S. District Court. Judge Renee Marie Bumb threw out the portion of the lawsuit claiming that the funds' 12b-1 fees are unreasonable, but is permitting the portion of the suit dealing with investment management fees to proceed.

The 83-page complaint, Kasilag et al. vs. Hartford Investment Financial Services, was brought in February 2011 by five plaintiffs who were invested in six Hartford funds through an employee-sponsored Simple IRA program. The suit alleges that excessive management and 12b-1 fees have diminished the plaintiffs' retirement savings by "staggering" amounts. The plaintiffs are asking to recover the total amount they paid in management fees.

The complaint argues that the management fees that the Hartford charges on its subadvised funds are excessive, because they are collected in addition to the fees paid to the subadvisors -- the firm, the suit contends, "collects a 'management fee' itself for performing little, if any, work." The complaint alleges that in 2010, HIFSCO earned over $157 million in investment management fees on the six funds, while paying $57 million in subadvisory fees.

And the suit takes issue with the funds' 12b-1 fees, which, it claims, "are are not tied to any distribution activities and no economies of scale are created or passed on to the Funds." The complaint notes that one fund's Class B shares charge 12b-1 fees despite having closed to new investment years earlier.

Judge Bumb ruled that while the plaintiffs have a reasonable cause to question the management fees, the record is "factually barren with regard to standing" on the matter of the 12b-1 fees.

The six funds named in the complaint are:

Hartford Growth Opportunities

Hartford Advisers Fund

Hartford Inflation Plus Fund

Hartford Conservative Allocation Fund

Hartford Global Health Fund

Hartford Money Market Fund 

Edited by: Chris Cumming


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