The U.S. Supreme Court has granted certiorari to review the Seventh Circuit's decision in Jones v. Harris Associates, which rejected the approach taken by the Second Circuit in Gartenberg v. Merrill Lynch Asset Mgmt. for reviewing challenges to mutual fund advisory fees brought under Section 36(b) of the Investment Company Act. For a discussion of the Harris Associates decision, please see Expect Focus, Vol. III, Summer 2008, available here.
The Supreme Court will hear and decide the Harris Associates case in the Court's next term, which opens October 5, 2009. The Court is expected to resolve the conflict among the circuit courts, and could affirm Harris Associates, reverse Harris Associates and adopt the Gartenberg standard, or adopt some other standard for reviewing mutual fund advisory fees.