A running log of legal and regulatory developments in the world of closed end funds packaged with unsolicited and (sometimes) insightful pro-investor commentary.

Partner Aaron Morris proposes in a comment letter to the SEC that the new rules governing service provider oversight should require contracts with providers to clearly delineate when a provider is entitled to indemnification and expense advancements.

During and after a crisis, trustees more than ever must be prepared to shift the way they think about the fund’s relationships with service providers in order to obtain meaningful results for shareholders (and mitigate or eliminate their own litigation risk). This article provides an example of what not to do and a few practical suggestions.

The fund industry recently lost its second case on the use of control share bylaws, which seek to limit the ability of large shareholders to vote their shares after their holdings exceed a defined threshold.

A recent BoardIQ article demonstrates, in my view, the perverse way in which trustees are encouraged to think about an investment adviser’s business.

The Delaware Court of Chancery, in an October 2021 opinion, held that a board wrongfully refused a stockholder demand because it was “reasonable to infer that the directors just did not care about complying with the legal requirements of Delaware law.” The decision is a reminder to directors that their fiduciary duties do not permit them to cursorily refuse a legitimate stockholder demand, and a reminder to investors that they have meaningful legal options if a board refuses to remedy clear corporate misconduct.

The most recent wave of mutual fund fee litigation is now over and investors should not be happy with the result. The wave consisted of 25 or so cases alleging that the fees charged by mutual fund advisers were excessive. While a handful settled, most were dismissed at various procedural stages by federal judges who couldn’t find an excessive fee in the entire lot.

Concerning trends for asset managers continued apace in 2020, as did efforts in courtrooms, legislatures and boardrooms to protect the industry’s underbelly.

In a recent Delaware Court of Chancery decision, stockholders of Gilead Sciences, Inc. successfully obtained attorneys’ fees after prevailing in a books and records action against the company. 

A Massachusetts Superior Court decision in March 2021 reaffirms the significant contractual, state law, and federal law protections over fund shareholder voting rights.