GroupThink

The Investment Company Institute (ICI) filed friend-of-the-court briefs in support of a case before the U.S. Supreme Court. As the ICI notes in a recent overview of the Jones v. Harris case on its Web site, “At issue in the case is the standard a federal court would use to review a claim by a fund shareholder alleging that a fund adviser received excessive fees under Section 36(b) of the Investment Company Act of 1940.” The Seventh Circuit’s decision departed from the standard established in 1982 by the U.S. Court of Appeals for the Second Circuit in Gartenberg v. Merrill Lynch Asset Management Inc., the ICI says, “which held that a fund adviser breaches its fiduciary duty to shareholders if it charges a fee ‘so disproportionately large that it bears no reasonable relationship to the services rendered and could not have been the product of arm’s-length bargaining.’”