SEC’s Focus in 2015 -

On December 11, 2014, Mary Jo White, Chair of the U.S. Securities and Exchange Commission (SEC), gave a speech at The New York Times DealBook Opportunities for Tomorrow Conference that highlighted the SEC’s priorities for 2015 related to industry risks arising from the portfolio composition and operations of investment advisers and funds. These priorities include enhancing data reporting, enhancing controls on risks related to portfolio composition, and improving transition planning and stress testing.

In her concluding remarks, Chair White stated the SEC will look to investors and market participants to provide input to help implement SEC staff proposals as workable regulations for funds and investment advisers. Consequently, to ensure that any final regulations reflect a blend of best practices and investor safeguards, funds, investment advisers, and other industry participants are well-advised to become acquainted with the proposals and involved in the conversation with SEC staff as soon as practicable.

Zehrer v. Harbor Capital Advisors, Inc.: Advisers May Not Charge Excessive Fees -

In Zehrer v. Harbor Capital Advisors, Inc., a shareholder of the Harbor International Fund alleged the fees paid to the fund’s investment manager and adviser were improper and excessive and constituted a breach of the adviser’s fiduciary duty under Investment Company Act Section 36(b). In response to a motion to dismiss, the U.S. District Court for the Northern District of Illinois found that the complaint adequately pleaded a plausible claim that the adviser breached its fiduciary duty by retaining fees that were disproportionate to the services rendered.