In Laborers’ Local 265 Pension Fund v. iShares Trust, No. 13-6486, 2014 U.S. App. LEXIS 18627 (6th Cir. Sept. 30, 2014), the United States Court of Appeals for the Sixth Circuit affirmed the dismissal of claims alleging violations of the fiduciary duties imposed by Sections 36(a) and 36(b) of the Investment Company Act of 1940 (ICA), 15 U.S.C. §80a-35(a), (b). The Court held that (1) a plaintiff may not aggregate a lending agent’s fees with an affiliate’s fees in order to find the affiliate breached Section 36(b), and (2) that there is no implied private right of action in Section 36(a).

In Laborers’ Local 265 Pension Fund v. iShares Trust, No. 13-6486, 2014 U.S. App. LEXIS 18627 (6th Cir. Sept. 30, 2014), the United States Court of Appeals for the Sixth Circuit affirmed the dismissal of claims alleging violations of the fiduciary duties imposed by Sections 36(a) and 36(b) of the Investment Company Act of 1940 (ICA), 15 U.S.C. § 80a-35(a), (b). The Court held that (1) a plaintiff may not aggregate a lending agent’s fees with an affiliate’s fees in order to find the affiliate breached Section 36(b), and (2) that there is no implied private right of action in Section 36(a).

However, the substance of the Supreme Court's decision in Harris Associates is contained in just two paragraphs:Finally, a court's evaluation of an investment adviser's fiduciary duty must take into account both procedure and substance. See 15 U. S. C. §80a–35(b)(2) (requiring deference to board's consideration "as is deemed appropriate under all the circumstances"); cf. Daily Income Fund, 464 U. S., at 541 ("Congress intended security holder and SEC actions under §36(b), on the one hand, and directorial approval of adviser contracts, on the other, to act as independent checks on excessive fees"). Where a board's process for negotiating and reviewing investment-adviser compensation is robust, a reviewing court should afford commensurate deference to the outcome of the bargaining process.

The defendant was represented by K&L Gates LLP. [1] In re Davis New York Venture Fund Fee Litig., No. 14 CV 4318-LTS-HBP, 2019 WL ___ (S.D.N.Y. May 30, 2019). [2] 15 U.S.C. § 80a-35(b).[3] 559 U.S. 335, 346 (2010).

10. 15 U.S.C. § 80a-35(b). 11.

On March 30, 2010, the United States Supreme Court, in a unanimous decision, standardized the law for determining whether investment adviser fees are excessive for purposes of the advisers fiduciary duty under Section 36(b) of the Investment Company Act of 1940 (the Act), 15 U.S.C. §80a-35(b). In a case closely watched by shareholders, investment advisers, and investment company boards alike, the Court in Jones v. Harris Associates L.P., 559 U.S. __, --- S. Ct. --- (2010), vacated the Seventh Circuits novel approach to excessive fee cases and adopted the standard which has been relied upon across the investment management industry for over a quarter of a century, Gartenberg v. Merrill Lynch Asset Mgmt., Inc., 694 F.2d 923 (2d Cir. 1982).