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Full-Text Articles in Securities Law
Sub-Adviser Fee Litigation: Will Section 36(B) Acquire Teeth?, Francis J. Facciolo, Leland S. Solon
Sub-Adviser Fee Litigation: Will Section 36(B) Acquire Teeth?, Francis J. Facciolo, Leland S. Solon
Faculty Publications
(Excerpt)
Section 36(b) of the Investment Company Act establishes a private breach of fiduciary duty cause of action for shareholders in an investment company, or mutual fund, to challenge the fees charged by the mutual fund’s investment adviser, in recognition of the fact that the adviser or one of its affiliates customarily creates the mutual fund and has a great deal of influence over the composition of the mutual fund’s board of directors or trustees, which negotiates the fees paid to the investment adviser. Under the Gartenberg standard, which was substantially adopted by the Supreme Court in Jones v. Harris …
New Wave Of Cases Involving Investment Adviser Fees, Francis J. Facciolo, Leland Solon
New Wave Of Cases Involving Investment Adviser Fees, Francis J. Facciolo, Leland Solon
Faculty Publications
(Excerpt)
Shareholders challenging fees paid to the advisers of their mutual funds in civil lawsuits under §36(b) of the Investment Company Act face steep substantive and procedural challenges, but a recent decision from the federal district of New Jersey holds promise for private plaintiffs in this area. The central allegation in Kasilag v. Hartford Investment Financial Services was that the defendant investment adviser retained sub-advisers to perform substantially all of the investment management services for the defendant’s client mutual funds, and then charged its fund clients much higher investment management fees than what those services actually cost defendant. Based on …