The mutual fund industry has thrown its support behind a bill that would give federal courts greater leeway to throw out frivolous lawsuits against mutual fund advisors.

The Mutual Fund Litigation Reform Act was introduced by Rep. Tom Emmer (R-Minn.) and wuold help federal courts end abusive lawsuits against mutual fund advisors before trial, while preserving the right of shareholders to bring meritorious actions, Emmer said in a statement.

Frivolous lawsuits are costing America’s 100 million mutual fund investors hundreds of millions of dollars in legal bills that would be better spent ... to help grow fund assets, Emmer argued.

"By ensuring lawsuit claims have evidence and are worth pursuing, we can increase the stability of these funds and secure investments in our future,” he added.

The fund industry’s trade group, the Investment Company Institute, is supporting the bill, which would amend the Investment Company Act of 1940, which grants both the Securities and Exchange Commission (SEC) and fund shareholders the right to sue a mutual fund advisor to challenge whether advisory fees are excessive and constitute a breach of the advisor’s fiduciary duty.

None of the growing number of lawsuits brought against fund advisors since Congress amended the Investment Company Act in 1970 “has resulted in a final judgment against the defendant advisor, evidence that these suits waste advisor resources without any benefit for the shareholders that plaintiff lawyers say they’re helping,” ICI President and CEO Paul Schott Stevens said.

The bill would discourage plaintiffs’ attorneys from bringing non-meritorious lawsuits by allowing judges to dismiss those suits at an earlier stage. It also would require plaintiffs to meet a standard of “clear and convincing evidence,” showing that it is “substantially more likely than not” that their claims are true.

This is already the existing standard required for lawsuits under the Employee Retirement Income Security Act of 1974 (ERISA), various federal whistleblower statutes, patent law and several other federal statutes, Emmer’s office added.

"Many Americans may not be aware how much of their savings is invested in mutual funds. Whether you’re a savvy investor or just placing a monthly amount into a 401(k) or other retirement account, these funds preserve our earnings and help us save for the future," Emmer said.

“Mitigating these unworthy claims would limit significant costs in the pre-trial discovery phase of the litigation,” he said.