Jerry N. Jones, et al. v. Harris Associates L. P. (559 U.S. 335)
U.S. Supreme Court · decided March 30, 2010 · Supreme Court Database (Spaeth)
- Citation
- 559 U.S. 335 · 130 S. Ct. 1418
- Decided
- March 30, 2010
- Term
- October Term 2009
- Vote
- 9–0
- Majority author
- Justice Alito
- Issue area
- Economic Activity
- Disposition
- Vacated and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice Alito delivered the opinion of the Court. We consider in this case what a mutual fund shareholder must prove in order to show that a mutual fond investment adviser breached the “fiduciary duty with respect to the receipt of compensation for services” that is imposed by § 36(b) of the Investment Company Act of 1940, 15 U. S. C. § 80a-35(b) (hereinafter § 36(b)). I A The Investment Company Act of 1940, 54 Stat. 789, 15 U. S. C. §80a-l et seq., regulates investment companies, including mutual funds. “A mutual fond is a pool of assets, consisting primarily of [a] portfolio [of] securities, and belonging to the individual investors holding shares in the fund.” Burks v. Lasker, 441 U. S. 471, 480 (1979). The following arrangements are typical. A separate entity called an investment adviser creates the mutual fond, which may have no employees of its own. See Kamen v. Kemper Financial Services, Inc., 500 U. S. 90, 93 (1991); Daily Income Fund, Inc. v. Fox, 464 U. S. 523, 536 (1984); Burks, 441 U. S., at 480-481. The adviser selects the fond’s directors, manages the fund’s investments, and provides other services. See id., at 481. Because of the relationship between a mutual fund and its investment adviser, the fund often “ ‘cannot, as a practical matter sever its relationship with the adviser. Therefore, the forces of arm’s-length bargaining do not work in the mutual fond…
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