September 22, 2009
On Sept. 3, four HLS professors joined more than 20 other corporate law and finance professors and scholars in an amici curiae brief filed in the case of Jones et al. v. Harris Associates, now pending before the U.S. Supreme Court. Twenty-five leading academics, including HLS Professors Robert Clark ’72, John Coates, Allen Ferrell ’95 and Mark Ramseyer ’82, signed the brief.
The case, which is scheduled for oral argument on Nov. 2, involves an appeal of a Seventh Circuit decision affirming the trial court’s dismissal of the case against Harris Associates, a mutual fund adviser. The district court ruled that as long as a mutual fund adviser does not breach the fiduciary duty owed to shareholders by failing to disclose all pertinent facts or otherwise hindering the fund’s directors from negotiating a favorable price, no judicial review of the reasonableness of the adviser’s fee is required in order to dismiss a claim under Section 36(b) of the Investment Company Act.
The scholars’ amici curiae brief—filed in support of position of the defendant, Harris Associates,—reviews facts and misperceptions about the mutual fund industry, showing that competition for investors is an important force in constraining advisor’s fees. Information about competition, the brief suggests, should inform the decisions of independent directors, evaluating advisory fees in the first instance, and of courts in the event of a fee challenge.
The brief was written by a team of lawyers at the law firm of Bingham McCutchen.