Supreme Court Amicus Merits Brief of Law Professors in Support of Petitioners, Jones v. Harris Associates, No. 08-586

Abstract

Amici curiae law professors filed this brief to urge the Court to reverse the Seventh Circuit and to apply a fiduciary standard under Section 36(b) of the Investment Company Act with modest scope but forceful effect to counterbalance the structural and behavioral vulnerabilities preventing market forces alone from imposing competitive discipline upon mutual fund advisory fees. The brief addresses the Seventh Circuit's decision to disavow the long-established Gartenberg precedent and to hold, instead, that so long as an adviser make[s] full disclosure and play[s] no tricks, a plaintiff cannot prevail in a Section 36(b) action. Amici argue that the Seventh Circuit's decision disregards Section 36(b)'s legislation, legislative history, and judicial precedent. With a greater appreciation for the unique structure and operation of mutual funds, the Supreme Court should emphasize comparisons between retail and institutional fees in the Section 36(b) fiduciary duty.

Amici: Barbara Bader Aldave, William Birdthistle, Barbara Black, Douglas Branson, James Cox, Steven Davidoff, Lisa Fairfax, James Fanto, Jesse Fried, Theresa Gabaldon, Joan MacLeod Heminway, Donald Langevoort, David Millon, Lawrence Mitchell, Charles Murdock, Donna Nagy, Elizabeth Nowicki, Alan Palmiter, Frank Partnoy, Margaret V. Sachs, William Sjostrom, Marc Steinberg, Ahmed Taha, Steven Thel, Randall Thomas, Manning Warren

Keywords: Section 36(b), Investment Company Act, fiduciary duty, mutual fund, compensation, Gartenberg, Supreme Court