Today, the Supreme Court agreed to review Jones v. Harris Associates, a Seventh Circuit decision rejecting the Gartenberg standard in litigation under § 36(b) of the Investment Company Act of 1940 and adopting a new test for reviewing advisory fee challenges under § 36(b).1 (The decision was previously covered in a WilmerHale client alert, dated May 27, 2008.)2 Petitioner asked the Supreme Court to review whether the Seventh Circuit "erroneously held, in conflict with the decisions of three other circuits, that a shareholder's claim that the fund's investment adviser charged an excessive fee—more than twice the fee it charged to funds with which it was not affiliated—is not cognizable under § 36(b), unless the shareholder can show that the adviser misled the fund's directors who approved the fee."3 The case will be heard and decided in the next Term, opening October 5, 2009.
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1 Jones v. Harris Assoc., 527 F.3d 627 (7th Cir. 2008). The Court's Order List to date for the upcoming Term is available at www.supremecourtus.gov/orders/courtorders/030909zor.pdf. Additional information on the Jones Supreme Court filings is available at www.supremecourtus.gov/docket/08-586.htm.
2 Available at www.wilmerhale.com/publications/whPubsDetail.aspx?publication=8329.
3 Petition for Certiorari at i, available at www.scotusblog.com/wp/wp-content/uploads/2009/02/08-586_pet.pdf.
