On January 8, 2018, the U.S. House of Representatives Financial Services Committee voted in favor of introducing a bill, referred to as the Mutual Fund Litigation Reform Act, that would increase the requirements for plaintiffs bringing excessive fee cases against mutual fund firms under Section 36(b) of the Investment Company Act of 1940. If adopted, the Act would amend Section 36(b) to require that excessive fee complaints “state with particularity all facts establishing a breach of fiduciary duty” and, if such alleged facts will be based on information and belief, also “state with particularity all facts on which that belief is formed.” In addition, it would set a new standard at trial for excessive fee claims, requiring plaintiffs to prove a breach of fiduciary duty “by clear and convincing evidence.” The Mutual Fund Litigation Reform Act will next go to the full House for consideration. 

The text of the Mutual Fund Litigation Reform Act is available at: https://www.congress.gov/bill/115th-congress/housebill/4738/text