American Chemicals & Equipment Inc. 401(K) Retirement Plan v. Principal Management Corp., No. 16-1576 (8th Cir. 2017)
Annotate this CaseACE filed suit against LifeTime Funds' investment adviser, PMC, for breach of its section 36(b) fiduciary duty to the LifeTime Funds under the Investment Company Act (ICA) of 1940, 15 U.S.C. 80a-35(b). ACE based its excessiveness-of-adviser-fees challenge on all or part of the adviser fees paid to PMC by the funds in which the LifeTime Funds invest, fees which indirectly reduced the net asset values of the LifeTime Funds. The Eighth Circuit affirmed the district court's entry of judgment for PMC based on lack of statutory standing, holding that ACE cannot sue on behalf of a fund in which it lacks an interest. In this case, each mutual fund was a separate unregistered investment company and ACE had no security interest in the underlying funds. Therefore, the cross appeal and the motion to dismiss the cross appeal were moot or denied as moot.
Court Description: Loken, Author, with Riley and Benton, Circuit Judges] Civil case - Investment Company Act of 1940. In action against the investment adviser retained by the mutual funds in which plaintiff had invested, alleging the adviser had breached its statutory fiduciary duty to the funds by charging excessive adviser fees to the funds, thereby indirectly reducing the net asset values of the funds, plaintiff lacked a cause of action under Section 36(b) of the Investment Company Act of 1940.
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