Abstract
Mutual fund investors pay over $100 billion every year in management fees to investment advisers. Throughout decades of litigation under Section 36(b) of the Investment Company Act, federal courts have yet to find that even a single management fee charged by an investment adviser for any period of time was excessive under the Section 36(b) standard. This paper argues that a combination of docile fund boards, hesitant federal courts, and a functioning, yet imperfect, market have allowed fund fees and expenses to decline in some areas, but not others. Outlier funds persist with unjustifiably high management fees, and have seemingly avoided market pressures. Fund boards and courts should play their legislatively assigned roles and check the ability of advisers to reap supracompetitive compensation.
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