In Re American Funds Securities Litigation

MEMORANDUM AND ORDER REGARDING DEFENDANTS’ MOTION TO DISMISS CONSOLIDATED AMENDED COMPLAINT

I.

INTRODUCTION

In this putative securities class action, Plaintiff investors allege that, during the relevant time period, the Capital Group Companies, Inc. and other entities that collectively make up the American Funds mutual fund family engaged in practices with brokerage firms that deprived investors of conflict-free advice and depleted mutual fund assets. The alleged scheme consists of two principal elements. First, Plaintiffs allege that American Funds charged its mutual funds excessive management and marketing fees that dissipated assets and thereby reduced the return to investors in those funds. But more importantly, according to Plaintiffs, American Funds used at least a portion of these excessive fees to pay additional compensation, which Plaintiffs characterize as “kickbacks,” to brokers as an incentive to the brokers to steer investors into purchasing American Funds mutual funds. As a result, according to Plaintiff investors, they received biased counsel from these secretly compensated broker-dealers instead of impartial investment advice. Two different groups of investors…