Fund Manager Liability For Changes In Investment Model

The Supreme Court ("Court") has ruled that an investment fund's ("Fund") articles rather than its investor marketing presentation or fact-sheet (together, "Marketing Materials") delineate management's authority regarding Fund investment strategies.

The case evolved around the claim of certain Fund partners that the Fund improperly deviated from the investment model ("Investment Model") presented in the Marketing Materials provided to them before they joined the Fund. Notwithstanding the strategy presented in the Marketing Materials, after witnessing US stock market volatility, the Fund's manager decided on his own initiative and without advising the partners to change the Fund's investment strategy to a higher-risk model. Following this decision, the Fund suffered heavy losses.