On August 12, 2010, the Ninth Circuit reversed the district court’s ruling in the case involving the Schwab YieldPlus Fund in holding that nothing in Section 13 of the 1940 Act creates a private cause of action or recognizes that one exists with the clarity and specificity required under Supreme Court precedent. In the Schwab case, the fund had a fundamental policy not to concentrate (i.e., invest more than 25% of its assets) in any industry. In 2001, the fund began classifying non-agency mortgage-backed securities (“MBS”) as a separate industry for concentration purposes and disclosed this in its SAI as a non-fundamental policy. Subsequently, in 2006, the fund identified non-agency MBS as not being part of any industry for purposes of its concentration policy and disclosed this fact in its SAI. The plaintiffs alleged that, by the end of February 2008, the fund had slightly more than 50% of its assets in MBS. The district court judge ruled that the fund violated Section 13 of the 1940 Act in not submitting these changes in industry classification to shareholders for approval. In its opinion, the Ninth Circuit stated that the language of Section 13, the structure of the 1940 Act and legislative history do not reflect any congressional intent to create, or recognize a private right of action, to enforce Section 13. The Ninth Circuit disagreed that the Sudan Accountability and Divestment Act’s bar to particular litigation is sufficient to constitute recognition of a pre-existing private right of action that is not otherwise evident in the language or structure of the 1940 Act.