The managers of two mutual funds in which Harvard holds large stakes filed suit against the University last Wednesday, alleging that Harvard is engaging in “strong-arm investment tactics.”

The managers of the funds allege that Harvard is attempting to realize short-term profits at the expense of other investors.

The case was brought in federal court against the Harvard Management Company (HMC), which manages Harvard’s endowment.

The dispute stems from a letter HMC sent on Jan. 16 recommending shareholders take the “extraordinary action” of terminating Templeton Asset Management as the manager of one of two Templeton funds in which Harvard holds a combined $115 million.

The letter resulted from a disagreement between HMC—the largest minority shareholder in the two funds—and Templeton over share prices.

HMC said the China World Fund and the Dragon Fund are trading at excessively low prices and that Templeton is not doing enough to raise the fund’s value, which have gained 33 and 24 percent over the past year, respectively.

“Templeton and the funds’ boards of directors have done remarkably little over the years to enhance shareholder value,” HMC said in a press release.

But Templeton said they have managed the funds well and that Harvard is seeking short-term profit that might hurt other investors.

“They’re looking out for the best interests of Harvard in terms of trying to gain short-term profit, and we believe that that is going to be to the detriment of our long-term shareholders,” said Templeton spokesperson Lisa Gallegos.

Templeton suggested in the complaint that Harvard’s alleged desire for short-term profit was at least in part motivated by the bonuses paid to HMC managers, including Vice President for Emerging Markets Steven Alperin, who was named as a co-defendant in the suit.

Gallegos said that Harvard’s communications to shareholders, which the complaint called “knowingly and materially false and misleading,” forced Templeton to defend its conduct.

“Harvard’s actions have left us no choice but to file this lawsuit,” she said. “We believe that Harvard has engaged in illegal activity that threatens to cause irreparable harm to…long-term shareholders of the fund.”

However, in its press release, HMC dismissed the lawsuit as “baseless” and characterized it as a “desperate act…to divert attention from the important issues.”

The China and Dragon funds are closed-end mutual funds, meaning that there are only a limited number of shares on the market, in contrast to open-end funds, which trade an unlimited number of shares. Open-end funds are instantly redeemable for a share of the assets, whereas closed-end funds do not guarantee such liquidity.

As a result, open-end funds trade at full value, while closed-end funds can also trade above or below the asset value.