American Century Fund Investors Drop Fee Suit

Investors in American Century Cos. mutual funds Monday dropped a lawsuit over fees charged by the funds’ advisor, one week before the case was to go to trial.

The investors had accused American Century Investment Management Inc., which oversees more than $100 billion in assets, of charging retail customers more for money management than big institutions such as pension plans.

American Century cut fees twice during the litigation, saving investors as much as $7 million a year, said the plaintiffs’ lawyer, Guy Burns. “We believe the fees are now reasonable,” he said.

Chris Doyle, a spokesman for Kansas City, Mo.-based American Century, said the company didn’t cut fees or reimburse investors to resolve the suit. “We negotiate fees with our boards every year,” Doyle said.

The investors’ case suffered a blow July 17 when a federal judge ruled that they couldn’t present evidence about American Century’s management of non-mutual fund accounts. The investors had argued that unlike pension fund fees, which are negotiated at arm’s length, mutual fund advisors are appointed by funds’ boards without competitive bidding.