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Gartenberg, Jones, Gallus: State of Play for Fund Advisory Fees

With the Supreme Court agreeing to hear Jones v. Harris Associates, and following the recent Eighth Circuit opinion in Gallus v. Ameriprise, there is some understandable confusion about the state of the now venerable Gartenberg factors. The Supreme Court's decision in the Jones case will likely determine the fate of the Gartenberg factors, and the standard that the Court adopts will effect directly the 15(c) contract renewal processes at all funds. But until there is a decision in the Jones case, fund directors all over the country are left scratching their heads about their roles and responsibilties regarding fund advisory fees.

The Harvard Law School Forum on Corporate Governance and Financial Regulation recently posted a very helpful article, "Mutual Fund Advisory Fees," by Bruce Clark and Aisling O’Shea of Sullivan & Cromwell summarizing the state of play for Gartenberg in light of the Seventh Circuit's decision in Jones v. Harris, the Eighth Circuit's decision in Gallus, and pending the Supreme Court's decision later this year in Jones.

Though written in an unavoidably legal style, this short peice should help fund directors sort out some of the issues in Jones and Gallus, and what effects each have on the Gartenberg factors they know so well.

The full text of the Harvard Law School blog piece is available at: http://blogs.law.harvard.edu/corpgov/2009/05/11/mutual-fund-advisory-fees/

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