Insights
Attorney Authored
Fund Boards in the Cross Hairs — Increased Litigation and Enforcement Activity
March 24, 2014
BY WILLIAM F. SULLIVAN, DOMENICK PUGLIESE & JOHN DURRANT
Among the myriad of responsibilities imposed on mutual fund boards of directors and trustees (‘‘Boards’’), none is more important than the decision to engage an investment adviser to manage the assets of a fund. Under current law, Boards are not only required to make the initial determination to engage an adviser and establish an advisory fee, but must also review these determinations annually. This annual ‘‘15(c)’’ review, named after the section of the Investment Company Act of 1940 (the ‘‘1940 Act’’) that mandates the process, has long been an area that has attracted the interest of regulators and the plaintiff’s bar.