Tuesday, June 16, 2009
William A. Birdthistle (Chicago-Kent College of Law) has posted on SSRN the Supreme Court Amicus Merits Brief of Law Professors in Support of Petitioners in Jones v. Harris Associates, No. 08-586, filed with the U.S. Supreme Court. William is the Counsel of Record and the principal drafter of the brief. The issue is the appropriate test for determining the reasonableness of the fees investment advisors charge to mutual funds under Section 36(b) of the Investment Company Act of 1940, which imposes a fiduciary duty on advisers with respect to fees. The Seventh Circuit (527 F.3d 627) diluted the fiduciary duty language of the statute and held that the fiduciary "must make full disclosure and play no tricks but is not subject to a cap on compensation" and asserted that "market forces" would sufficiently regulate the fees. This is certain to be an important case in mutual fund regulation.