On March 30, 2010, the Supreme Court announced its decision in Jones v. Harris Associates. The question in this case was what a mutual fund shareholder must prove in order to show that a mutual fund investment adviser breached the "fiduciary duty with respect to the receipt of compensation for services" that is imposed by Section 36(b) of the Investment Company Act of 1940.
In a 9-0 decision delivered by Justice Alito, the Court held that to be held liable under Section 36(b), 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.
Justice Thomas filed a concurring opinion.
To discuss the case, we have George Mason University School of Law Professor D. Bruce Johnsen.