US Fund Litigation Update: Where We are Now and Where We Could be Headed

March 24, 2014

Five years removed from the credit crisis and “great recession” of 2008, the U.S. fund industry still faces substantial litigation risk, both in terms of ongoing cases that challenge the core of the advisory/sub-advisory model and the potential for new threats. While cases premised on the alleged failure of mutual funds to accurately describe their investment strategies and attendant risks from the credit crisis have subsided, cases challenging advisory fees under Section 36(b) of the Investment Company Act of 1940 are on the rise. This article summarizes the current mutual fund litigation landscape and provides an assessment of where the civil litigation against the fund industry could be headed in the months and years to come.

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