Jones v. Harris, Compensation, and Fiduciary Obligations

The Supreme Court issued the much awaited opinion in Jones v. Harris, a case that involved compensation paid to investment advisors at mutual funds.  The lower court decision came from the 7th Circuit, with Judge Posner on one side (the dissent) and Judge Easterbrook on the other.   The opinion is here.  

On this one, Judge Posner won, with the Court in a unanimous decision reversing the lower court.  With respect to Judge Easterbrooks' argument that the matter of compensation was merely a matter of disclosure and better left to the market than litigation, the Court disagreed, noting that "[b]y focusing almost entirely on the element of disclosure, the Seventh Circuit panel erred.

Comments

[MJG]

I wouldn't call it a complete victory for Posner. How about this as the penultimate line in the opinion: "The debate between the Seventh Circuit panel and the dissent from the denial of rehearing en banc regarding today's mutual fund market is a matter for Congress, not the courts."