Supreme Court Docket Report - March 10, 2009

Originally published March 10, 2009

Keywords: Investment Company Act, Fiduciary Duty, Investment Advisers, mutual fund investors, shareholders, private right of action, Jones v Harris Associates, fund fees, breach of fiduciary duty

On March 9, 2009, the Supreme Court granted certiorari in one case of interest to the business community:

Investment Company Act—Fiduciary Duty of Investment Advisers

Congress passed the Investment Company Act of 1940, 15 U.S.C. §§ 80a-1 et seq., to protect mutual fund investors.  Section 36(b) of the Act imposes on investment advisers, who often create and manage mutual funds, "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.  Id. § 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 is