AXA US Wins Fee Litigation
August 26 2016 - 11:11AM
Business Wire
After five years of litigation culminating in a 25-day trial, a
New Jersey federal court yesterday granted AXA Equitable Life
Insurance Company (“AXA Equitable”) and its wholly-owned
subsidiary, AXA Equitable Funds Management Group, LLC (“FMG LLC”
and together with AXA Equitable, “AXA US”), a significant victory
in ruling that AXA US did not receive excessive compensation for
managing and administering certain of its mutual funds. (In the
matters entitled Mary Ann Sivolella v. AXA Equitable Life Insurance
Company and AXA Equitable Funds Management Group, LLC and Sanford
et al. v. AXA Equitable Funds Management Group, LLC (Civil Action
No. 3:11-cv-04194 (D.N.J.)).
Dave S. Hattem, Senior Executive Director and General Counsel of
AXA Equitable commented that “While it is quite unusual for cases
of this type and magnitude to be tried in Court to decision, AXA US
strongly believed that the lawsuits were without merit and that we
provide quality services to our clients. We have consistently
defended our business structure, our conduct and the conduct of EQ
Advisors Trust’s (“EQAT”) independent trustees and are extremely
pleased that the Court thoughtfully applied the well-established
law to our facts and found that the fees charged were fair and
reasonable.”
In a lengthy 159-page opinion, Judge Peter G. Sheridan
meticulously detailed the Court’s decision that plaintiffs had
failed to meet the burden of proving their case. With respect to
the primary allegations made by plaintiffs that FMG LLC charged
“exorbitant fees” while delegating “all of the services” to
sub-advisers or a sub-administrator for a “nominal amount” and that
the EQAT Board was not impartial, careful or conscientious in
approving the advisory and administrative services fees charged,
the Court found “that FMG continued to perform significant
administrative and investment management duties, despite the fact
that some were delegated to subs. The managerial role that FMG
plays in coordinating with sub-advisers and sub-administrators is
extensive. … The duties performed by FMG are far more extensive
than Plaintiffs’ contention that FMG delegated all of its work to
the subs.” With respect to the role and conduct of the EQAT Board,
the Court found “that the Board’s makeup is sufficiently diverse
and independent, and the procedures it followed demonstrate that
the Board robustly reviewed FMG’s compensation.”
The Court’s decision vindicates FMG LLC’s “manager-of-managers”
structure, whereby FMG LLC provides essential services to the funds
and at its own expense and engages third-party service providers to
provide certain limited investment and administrative services.
Steven M. Joenk, Managing Director of AXA Equitable and President
and Chief Executive Officer of FMG LLC, added that “our structure
allows us to continue to offer shareholders a diverse menu of
investment options. We applaud the court’s ruling and look forward
to continuing to help our clients meet their financial goals. We
also appreciate the Court’s recognition of the independence, care
and diligence of the independent trustees who annually review the
compensation received by FMG LLC.”
The AXA US case is the first Section 36(b) excessive case to go
to trial since 2009 and is the first of the numerous cases that
recently have been filed challenging the manager of managers
structure. AXA US firmly believes that the rigorous and
well-established processes that have been put in place with respect
to the services provided, and the fees charged, to its mutual
funds, as well as the Board’s conduct, factored heavily in the
Court’s decision. As noted by the Court, “In disputing the services
that FMG and AXA perform, Plaintiffs simply point to contract
provisions from the various agreements. However, to adopt
Plaintiff’s position would ignore voluminous testimony of credible
witnesses.”
About AXA
“AXA” (also referred to as “AXA US”) is a brand name of AXA
Equitable Financial Services, LLC and its family of companies,
including AXA Equitable Life Insurance Company (NY, NY), MONY Life
Insurance Company of America (AZ stock company, administrative
office: Jersey City, NJ), AXA Advisors, LLC, and AXA Distributors,
LLC. In business since 1859, AXA Equitable Life Insurance Company
is a leading financial protection company and one of the nation’s
premier providers of life insurance and annuity products
distributed to individuals and business owners through its retail
distribution channel, AXA Advisors, LLC (member FINRA, SIPC) and to
the financial services market through its wholesale distribution
channel, AXA Distributors, LLC (member FINRA, SIPC)
AXA S.A. (also referred to as “AXA Group”) is a
Paris-headquartered holding company for a group of international
insurance and financial services companies, including AXA Equitable
Financial Services, LLC companies. AXA S.A. is a worldwide leader
in financial protection strategies and wealth management with 103
million clients in 64 countries as of Dec. 31, 2015. AXA S.A. has
been ranked the No. 1 insurance brand in the world by Interbrand
for seven consecutive years as of Oct. 5, 2015.
The obligations of AXA Equitable Life Insurance Company and MONY
Life Insurance Company of America are backed solely by their
claims-paying ability. Find AXA
on Facebook, Twitter and LinkedIn. For more
information, visit www.axa.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20160826005425/en/
Media:AXAJohn Cline,
212-314-5142john.cline@axa.us.com
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