Topic: D&O Liability

Are Mutual Fund Investors Seeking an End Run Around Ameriprise Financial v. Gallus?

Investors in various mutual funds managed by Principal Financial Group filed a derivative action under Section 36(b) of the Investment Company Act of 1940 in Iowa federal court in late October, alleging that the company charged excessive fees.  The complaint in Curran et al. v. Principal Management Corporation & Principal Funds Distributor, Inc., S.D. Iowa No. 12-513, is available here

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SEC’s Asset Management Unit Continues to Probe Valuation Methods of Hedge Funds with Latest Case Against Yorkville

On October 17, the SEC filed a lawsuit in the Southern District of New York against hedge fund Yorkville Advisors LLC, as well as its President Mark Angelo and CFO Edward Schinik.  The action, brought by the SEC’s Asset Management Unit, is the latest alleged fraud brought to light by its “Aberrational Performance Inquiry,” which uses risk analytics to identify returns from hedge funds that appear to be too good to be true. 

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Alleged Mutual Fund Kickback Case Allowed to Proceed as Class Action

Financial lines insurers may want to take a closer look at revenue-sharing agreements between pension plan administrators and the mutual funds they offer plan participants as investment options, in the wake of a Connecticut federal court’s decision to certify a class action against ING Life Insurance & Annuity Company. 

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New York Court Dismisses Madoff Claim Against Investment Advisors & Fund Managers

A New York State trial court recently dismissed claims by the holders of variable life insurance policies, some of whose excess cash value was invested with Bernard Madoff’s securities firm, against various investment advisors and hedge fund managers.  The decision is SSR II, LLC v. John Hancock Life Insurance Company, et al., No. 652793/2011 (N.Y. Sup. Ct. – N.Y. Co. – Sept. 28, 2012). 

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Market Timing Case Goes to U.S. Supreme Court

D&O and E&O carriers alike will want to keep a close eye on the US Supreme Court this term.  On September 25, the court accepted the matter of Gabelli v. SEC, No. 11-1274.  Another market-timing case against investment advisors, at issue in Gabelli is when a claim accrues under the 5-year statute of limitations for SEC enforcement actions. 

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Edwards Wildman to Attend Premier Industry Fracking Conference in Philadelphia

The  Marcellus Shale Coalition will be hosting SHALE GAS INSIGHT™ 2012 at the Pennsylvania Convention Center in Philadelphia from Wednesday, September 19, through Friday, September 21.  Edwards Wildman attorneys Marc Voses, Tony Hopp, Len Kurfirst and Greg Hoffnagle will provide live updates throughout the conference at and @EdwardsWildman on Twitter. 

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New York Adopts Delaware’s “Tooley Test” for Distinguishing Between Derivative and Direct Actions

The New York Supreme Court, Appellate Division, First Department, issued a ruling this past week in which it adopted a “clear approach” for determining the difference between direct and derivative claims.  The decision clarifies heretofore murky New York law on the topic.  A copy of the slip opinion, Yudell v. Gilbert, 2012 N.Y. Slip Op. 05896 (N.Y. App. Div. 1st Dep’t Aug. 7, 2012), is available here

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