Second Circuit Rules on Securities Fraud and Breach of Fiduciary Duty Claims of Mutual Fund Shareholders Relating to Affiliated Transfer Agent Arrangements May Proceed, But Upholds Dismissal of Breach of Fiduciary Duty Claim

May 07, 2010

The U.S. Court of Appeals for the Second Circuit recently ruled that putative securities fraud and breach of fiduciary duty claims brought by shareholders of the Smith Barney family of funds based on undisclosed compensation arrangements between an affiliate of the funds’ advisers and a third-party sub-transfer agent to the funds could proceed. This alert discusses the decision and certain implications for investment advisers to registered investment companies.

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