News & Analysis as of

Mutual Funds Shareholders

Ropes & Gray LLP

Overview of ETF Share Class Operational Issues

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One of the most talked about topics in asset management is the possibility of offering Mutual Fund and ETF Classes in the same Fund. It appears that Funds may obtain the Relief necessary to offer these Share Classes in the...more

Carlton Fields

Can Shareholders Rescind an Investment Company’s Contracts Based on 1940 Act Violations?

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Section 47(b) of the Investment Company Act of 1940 provides that contracts that violate or “whose performance involves, a violation of” the act are not enforceable by “either party.” ...more

Seward & Kissel LLP

SEC Staff Issues FAQs On Tailored Shareholder Reports

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Who may be interested: Registered Investment Companies - Quick Take: The staff of the SEC’s Division of Investment Management (Staff) recently issued responses to frequently asked questions (FAQs) covering the SEC’s...more

Troutman Pepper Locke

SEC Releases New Guidance on Tailored Shareholder Reports

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On January 19, 2024, the Division of Investment Management staff at the Securities and Exchange Commission (SEC), released several responses to frequently asked questions (FAQs) related to the adoption of rules and form...more

K&L Gates LLP

Fifth Circuit Affirms Dismissal of Derivative Suit Against Mutual Fund Adviser and Trustees

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The Fifth Circuit Court of Appeals recently affirmed the dismissal of a shareholder derivative suit filed against the manager and trustees of a Massachusetts business trust and SEC-registered investment company. In doing so,...more

Seward & Kissel LLP

SEC Releases Staff Bulletin on Differential Advisory Fee Waivers

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Who may be interested: Investment Advisers, Mutual Fund Boards of Directors - Quick Take: The SEC staff recently issued a bulletin to highlight the requirements of Section 18 of the Investment Company Act of 1940 (1940...more

Morrison & Foerster LLP

SEC Requires Tailored Shareholder Reports and Amends Fund Advertising Rules

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Recently, the U.S. Securities and Exchange Commission (SEC) adopted rule and form amendments for registered open-end funds (Final Rules) that will substantially change the form and content of fund shareholder reports. The SEC...more

Herbert Smith Freehills Kramer

SEC Votes to Overhaul Mutual Fund and ETF Shareholder Reports

On Oct. 26, 2022, the Securities and Exchange Commission (SEC) unanimously voted to amend the annual and semi-annual shareholder report requirements for mutual funds and ETFs (Funds). The amendments, which require that Funds...more

Carlton Fields

Converting Mutual Funds to ETFs: A Fertile Field?

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A trend seems to be starting for open-end management investment companies to reorganize into exchange-traded funds. The March 12, 2021, merger of the Adaptive Growth Opportunities Fund, a series of the Starboard Investment...more

Carlton Fields

SEC Proposes Changes to Fund Shareholder Reports, Prospectuses, SAIs, and Ads

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On August 5, the SEC proposed what it called “comprehensive modifications to the mutual fund … disclosure framework.” ...more

Goodwin

Financial Services Weekly Roundup: SEC Proposes Modified Disclosure Framework For Funds

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In the News. The Securities and Exchange Commission (SEC) proposed modifying the disclosure framework for mutual funds and exchange-traded funds (funds), which would create a new layered disclosure regime that attempts to...more

Bass, Berry & Sims PLC

Chris Lazarini Outlines Factors to Determine Whether Adviser's Fees Violate Investment Company Act

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Bass, Berry & Sims attorney Chris Lazarini outlined the factors courts must consider in determining whether the fees an adviser charges a mutual fund are excessive and in violation of the Investment Company Act. All the...more

K&L Gates LLP

Court Grants Summary Judgment to Defendant Investment Adviser in Section 36(b) Excessive Fee Lawsuit

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In a strong opinion, a federal court in the Southern District of New York recently dismissed a suit alleging that the defendant charged “excessive” fees to a mutual fund....more

Broker-Dealer Compliance + Regulation

Open-End Fund Converts to Closed-End Fund

In what has been reported as a market first, the independent directors and shareholders of an open-end fund (mutual fund) agreed to convert an approximately $1 billion open-end fund to an exchange-listed, closed-end fund....more

Morgan Lewis

In Eagerly Awaited Ruling, AXA Beats Excessive Fee Claim

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The fund manager was victorious in the first court decision to come from a group of complaints filed over the last several years against manager-of-manager models. Introduction - Following a 25-day bench trial, the...more

BakerHostetler

New District Court Ruling Makes It Easier for Mutual Fund Investors to Bring Securities Fraud Claims in Class Actions

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For years, mutual fund shareholders have been limited in their ability to successfully allege securities fraud in class actions under the federal securities laws against mutual fund executives, directors and advisers. These...more

Carlton Fields

SEC Committee Recommends Investor-Specific Mutual Fund Cost Disclosures

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In mid-April, the SEC’s Investor Advisory Committee (IAC) issued a recommendation that the SEC "explore ways to improve mutual fund cost disclosures." As a first step, the IAC urges the SEC to require that periodic...more

K&L Gates LLP

U.S. SEC Proposes Liquidity Risk Management Programs, Optional “Swing Pricing,” and Liquidity Reporting for Mutual Funds and...

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On September 22, 2015, the Securities and Exchange Commission (“SEC”) proposed a new rule and amendments to rules and reporting forms under the Investment Company Act of 1940 (the “1940 Act”), designed to standardize...more

Carlton Fields

Navigating Derivative Lawsuits Against Mutual Funds After Northstar

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The Ninth Circuit Court of Appeals this spring held that mutual fund shareholders could maintain direct claims against the fund’s trustees for breach of their common law fiduciary duties. Before Northstar v. Schwab, such...more

Morgan Lewis

SEC Proposes Liquidity Risk Management Rules for Open-End Funds

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In the second step of its five-part plan to enhance registered funds regulations, the SEC has proposed new requirements on portfolio liquidity, risk monitoring, and board oversight. At an open meeting held on September...more

Morrison & Foerster LLP

SEC Proposes Rules to Require Funds to Adopt Liquidity Risk Management Programs; Allow “Swing Pricing”

At an open meeting on September 22, 2015, the SEC proposed new rules and amendments to existing rules to require open-end investment companies to adopt comprehensive liquidity risk management programs. The rules would also...more

Troutman Pepper

The SEC Releases the First Distribution-In-Guise Enforcement Action Concerning Fund Assets Used to Pay For Marketing and...

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The SEC’s order provides significant guidance on how the SEC staff will scrutinize the propriety of payments made pursuant to commonly occurring agreements between mutual funds and their service providers and with respect to...more

Carlton Fields

Gatekeeper Liability of Inside Asset Management Attorneys "Appearing" Before the SEC

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This article addresses the liability of inside attorneys at asset management companies— mutual fund sponsors, investment advisers, broker-dealers, life insurance companies—as gatekeepers under rules of the US Securities and...more

K&L Gates LLP

Seventh Circuit Affirms District Court on Remand in Jones v. Harris Associates

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In Jones v. Harris Associates L.P., the Supreme Court adopted the Gartenberg standard for cases brought under Section 36(b) of the Investment Company Act of 1940: “[T]o face liability... an investment adviser must charge a...more

Skadden, Arps, Slate, Meagher & Flom LLP

"The New Mutual Fund Exception: Ninth Circuit Allows Direct Claims to Redress Derivative Injury"

Courts have sought to simplify their approach to determining whether an action is derivative or direct — a determination that the Delaware Supreme Court has acknowledged “is sometimes difficult.” Tooley v. Donaldson, Lufkin &...more

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