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What can mutual fund boards and advisers learn from the AXA trial ruling?

Eben Colby (Skadden, Boston, MA, USA)
Thomas DeCapo (Skadden, Boston, MA, USA)
Kenneth Burdon (Skadden, Boston, MA, USA)
Aaron Morris (Skadden, Boston, MA, USA)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 2 May 2017




To analyze the August 2016 court decision in Sivolella v. AXA Equitable Life Ins. Co. and its implications for cases concerning mutual fund advisory fees under Section 36(b) of the of the Investment Company Act of 1940.


Discusses Section 36(b), the plaintiffs’ arguments and the judge’s decision in favor of the mutual fund adviser. Provides insights from the judge’s analysis of the advisory fees at issue, including the independence of the mutual fund board and quality of the annual advisory contract renewal process, whether the language of the advisory and subadvisory agreements fully reflects the nature and extent of services provided, the board’s reliance on outside experts and advisers when considering the advisers’ fees and services, and continuous improvements in the boards’ annual advisory contract renewal process.


AXA was a decisive victory for the adviser, and serves as a reminder to boards and advisers alike that a diligent focus on board process and independence can pay twofold after litigation is filed.

Practical implications

Boards and advisers should consider AXA’s implications, and whether the decision raises issues that should be reviewed by independent counsel with experience advising funds and advisers with respect to the Investment Company Act.


Practical guidance from experienced financial services lawyers.



Editor’s Note: This article was published in the September 12, 2016 issue of Law360:


Colby, E., DeCapo, T., Burdon, K. and Morris, A. (2017), "What can mutual fund boards and advisers learn from the AXA trial ruling?", Journal of Investment Compliance, Vol. 18 No. 1, pp. 58-62.



Emerald Publishing Limited

Copyright © 2017, Skadden, Arps, Slate, Meagher and Flom LLP

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