In Laborers’ Local 265 Pension Fund v. iShares Trust, No. 13-6486, 2014 U.S. App. LEXIS 18627 (6th Cir. Sept. 30, 2014), the United States Court of Appeals for the Sixth Circuit affirmed the dismissal of claims alleging violations of the fiduciary duties imposed by Sections 36(a) and 36(b) of the Investment Company Act of 1940 (ICA), 15 U.S.C. § 80a-35(a), (b).  The Court held that (1) a plaintiff may not aggregate a lending agent’s fees with an affiliate’s fees in order to find the affiliate breached Section 36(b), and (2) that there is no implied private right of action in Section 36(a).  The Court’s holding effectively limits the ability of plaintiffs to bring Section 36 claims.
Continue Reading Sixth Circuit Narrows Scope of Liability Under ICA Sections 36(a) and (b)

On February 25, 2014 the Securities and Exchange Commission (the “SEC”) filed public administrative and cease-and-desist proceedings against Arizona-based Clean Energy Capital, LLC (a registered investment adviser, “CEC”) and its founder and Chief Executive Officer Scott Brittenham charging that CEC and Brittenham committed the following violations with respect to the 20 private equity funds sold and managed by CEC primarily under the name of Ethanol Capital Partnership, L.P. (the “ECP Funds”)…
Continue Reading SEC Brings Charges Against SEC Registered Investment Adviser for Improperly Allocating Expenses and Other Violations of the Investment Advisers Act of 1940 (the “Advisers Act”)

On January 9, 2014, the Securities and Exchange Commission released its examination priorities for 2014 (the “2014 Exam Priorities Release”), covering a wide range of issues at financial institutions, including investment advisers and investment companies, hedge funds and private equity funds.  The 2014 Exam Priorities Release highlights a number of areas and key risks that the SEC will be monitoring and examining in 2014.  The SEC has identified the following core risk areas for investment advisers:
Continue Reading SEC Announces 2014 Examination Priorities for Investment Advisers

In Sun Capital Partners III, L.P. et al. v. New England Teamsters & Trucking Industry Pension Fund, No. 12-2312, 2013 WL 3814985 (1st Cir. July 24, 2013), the First Circuit held that a private equity fund could be liable for its bankrupt portfolio company’s withdrawal liability imposed under Title IV of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) on the basis of the private equity fund constituting a “trade or business” under ERISA’s controlled group rules. By way of background, ERISA generally requires employers that withdraw from a union-sponsored pension plan (also known as a “multiemployer plan”) to pay their proportionate share of the plan’s funding obligations for vested but unfunded benefits accrued by the employer’s union employees at the time of the withdrawal. The withdrawal liability provisions under Title IV of ERISA are intended to protect remaining employers that participate in a multiemployer plan from being saddled with the underfunded pension liabilities attributable to the employees of employers that withdraw from the plan. Under ERISA’s controlled group rules, withdrawal liability imposed under Title IV of ERISA is shared jointly and severally among a contributing employer and each “trade or business” under common control with the contributing employer.Continue Reading First Circuit Finds that a Private Equity Fund Can Be Liable for the Pension Obligations of its Portfolio Company