Jones v. Harris Resource Center

Overview

On March 30, 2010, in a unanimous decision, the United States Supreme Court endorsed the well-tested legal framework articulated in the Second Circuit’s 1982 decision in Gartenberg v. Merrill Lynch Asset Management (commonly called the Gartenberg standard). This standard—used by courts since 1982 to assess claims of excessive fund advisory fees—formed the framework used by fund boards in considering advisory fees as part of the annual advisory contract review process.

Specifically, the Court held that, in order to be found liable in a shareholder suit brought under Section 36(b) of the Investment Company Act of 1940, an investment adviser must charge a fee that is “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.”  

This page has background information about this important case and the Court’s decision.

Editorial: Mutual Assured Destruction, Wall Street Journal
Nov 3, 2009

Editorial: Stop Suing Yourself, The Washington Times
Nov 2, 2009

Opinion: The Trial Lawyers' Latest Target: Mutual Funds, National Review Online
Nov 2, 2009

Opinion: The Real Motivation Behind Jones v. Harris, Ignites
Nov 2 2009

Opinion: Tort Lawyers Target Mutual Funds, The Wall Street Journal
Nov 2 2009

Opinion: It's Time to Stop the Trial Bar's Assault on Mutual Funds, Investment News
Nov 1, 2009

Opinion: A Costly Lesson in the Rule of "Loser Pays," Financial Times
Nov 2, 2009

Opinion: Jones v. Harris: Standing Up for Directors, Board IQ
Oct 27, 2009

Opinion: Channel Anger at Wall Street Pay, Not Fund Fees, Investor’s Business Daily
Oct 29, 2009

Decision: March 30, 2010