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Pfeiffer v. Bjurman, Barry & Associates

Citation: 215 F. App'x 30Docket: No. 06-1580-cv

Court: Court of Appeals for the Second Circuit; January 24, 2007; Federal Appellate Court

Narrative Opinion Summary

Milton Pfeiffer appeals the dismissal of his second amended complaint, which claimed violations of Section 36(b) of the Investment Company Act. This section establishes a fiduciary duty for investment advisers regarding compensation received from registered investment companies. The district court granted summary judgment for the defendants, ruling they were not the recipients of the fees in question, a necessary condition for liability under the statute. Pfeiffer argued that Bjurman, Barry & Associates caused the Bjurman, Barry Micro-Cap Growth Fund to incur excessive 12b-1 fees for marketing services. However, it was determined that the fees were not ultimately paid to the defendants, and potential liability for these fees if service agreements were terminated did not qualify them as recipients under the law. The court affirmed the dismissal, finding the defendants were not liable, and dismissed all of Pfeiffer's additional arguments as meritless.

Legal Issues Addressed

Affirmation of Dismissal

Application: The appellate court affirmed the district court's dismissal, agreeing with the finding that the defendants were not liable under the statute.

Reasoning: The court affirmed the dismissal, finding the defendants were not liable, and dismissed all of Pfeiffer's additional arguments as meritless.

Fiduciary Duty under Investment Company Act Section 36(b)

Application: The court evaluated whether the defendants were liable for breaching fiduciary duties related to compensation from investment companies.

Reasoning: Milton Pfeiffer appeals the dismissal of his second amended complaint, which claimed violations of Section 36(b) of the Investment Company Act. This section establishes a fiduciary duty for investment advisers regarding compensation received from registered investment companies.

Liability for Excessive Fees

Application: The court found that the defendants were not liable for excessive 12b-1 fees as they were not the ultimate recipients, nor would potential liability upon termination of service agreements make them recipients under the law.

Reasoning: Pfeiffer argued that Bjurman, Barry & Associates caused the Bjurman, Barry Micro-Cap Growth Fund to incur excessive 12b-1 fees for marketing services. However, it was determined that the fees were not ultimately paid to the defendants, and potential liability for these fees if service agreements were terminated did not qualify them as recipients under the law.

Summary Judgment Standards

Application: The district court granted summary judgment to the defendants, concluding they were not the recipients of the fees in question, which is a necessary condition for liability.

Reasoning: The district court granted summary judgment for the defendants, ruling they were not the recipients of the fees in question, a necessary condition for liability under the statute.