United States Supreme Court
Jones v. Harris Assocs. L.P., 08-586
In an action by shareholders in mutual funds managed by defendant investment adviser alleging that defendant violated section 36(b)(1) of the Investment Company Act of 1940, the Seventh Circuit's order affirming the district court on alternative grounds is vacated and remanded where, based on section 36(b)'s terms and the role that a shareholder action for breach of the investment adviser's fiduciary duty plays in the Act's overall structure, Gartenberg v. Merrill Lynch Asset Management, Inc., 694 F. 2d 923 (2d Cir. 1982), applied the correct standard to section 36(b) claims. More specifically, to be guilty of a violation of section 36(b), an adviser must charge a fee that is so disproportionately large it bears no reasonable relationship to the services rendered and could not have been the product of arm's length bargaining.
Appellate Information
- Decided 03/30/2010
- Published 03/30/2010
Judges
Court
- United States Supreme Court