Subsequent to its decision in Jones v. Harris Associates (“Harris Associates”) discussed above, the U.S. Supreme Court (the “Supreme Court” or the “Court”) addressed the Eighth Circuit decision in Ameriprise Financial v. Gallus (“Gallus”), a case also involving an excessive advisory fee claim under Section 36(b) of the Investment Company Act of 1940, as amended. In Gallus, which was decided after the Seventh Circuit decision reviewed in Harris Associates, the Eighth Circuit applied yet another Section 36(b) standard that encompassed both the multi‑factor Gartenberg approach and the Seventh Circuit’s approach focused on adviser conduct in the contract approval process (see the April 14, 2009 Alert for a more detailed discussion of Gallus). The Supreme Court accepted Gallus for review after agreeing to review Harris Associates. In a summary disposition order, the Court vacated Gallus and remanded the case to the Eighth Circuit for further proceedings in accordance with Harris Associates.
Alert April 06, 2010