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ARTICLE · 02 APRIL 2010

Supreme Court Decision Alert - March 30, 2010

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Section 36(b) of the Investment Company Act of 1940 imposes on investment advisers "a fiduciary duty with respect to the receipt of compensation for services" from a mutual fund, and gives fund shareholders a private right of action for breach of that duty.

United StatesLitigation, Mediation & Arbitration
Andrew Tauber
Andrew Tauber
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Originally published March 30, 2010

Keywords: Investment Company Act, fiduciary duty, investment advisers, False Claims Act, Public Disclosure Bar

Today the Supreme Court issued two decisions, described below, of interest to the business community.

  • Investment Company Act—Fiduciary Duty of Investment Advisers
  • False Claims Act—Public Disclosure Bar

Investment Company Act—Fiduciary Duty of Investment Advisers

Jones v. Harris Associates, L.P., No. 08-586 (previously discussed in the March 10, 2009 Docket Report)

Section 36(b) of the Investment Company Act of 1940 imposes on investment advisers "a fiduciary duty with respect to the receipt of compensation for services" from a mutual fund, and gives fund shareholders a private right of action for breach of that duty. 15 U.S.C. § 80a-35(b). The Act further provides that, in such an action, "approval by the [fund's] board of directors" of the fee paid "shall be given such consideration by the court as

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