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Fraternity little sister organizations were extremely popular from the 1960s up through the early 1990s. The Pikes called ours the "Little Sisters of the Shield & Diamond." Other fraternities had similar names (i.e. Little Sisters of the Maltese Cross, etc).
The 1990s was a decade of lawyers. Liability was the big subject. The cover story for various national fraternities banning little sister groups was liability. They said having women under the umbrella of the fraternity's name would increase expose to insurance claims. There was also concern that such auxilleries might jeapordize the single-sex legal status of traditional fraternities and sororites.
I have my own theory. The little sister groups grew so large and so popular that existing sororities felt threatened. Fraternities on our campus used to hold "little sister rush". It cost a lot of money to join a sorority; there was very little cost at all in joining a little sister group.
On my campus, the top sororities do not take non-freshmen. If they do, it may be only one or two. We have a huge influx of junior college grads - fantastic women who would make wonderful sorority sisters - but they cannot get bids to the best houses because they are too old. They don't want to pay money to be part of a group that's a fixer-upper.
The sororities didn't like their monopoly taken away. Little Sisters had instant access to the best fraternities, and paid very little money. Better still, juniors were as welcome as freshmen. I've heard that sorority alumni lobbied their national offcies to push the fraternity national offices to ban little sisters. I'm not surprised that virtually all the fraternities took this action at about the same time. The traditrional sororities got their monopolies back. They won't expand the number of chapters on a campus, and thousands of junior girls are left out. But they're happy as ticks because they've got control of the social system. Little sisters threatened that control.
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