Title

The Seventh Circuit Decision in Wsol v. Fiduciary Management Associates and the Amendment to Rule 12b-1

Document Type

Article

Publication Date

8-2004

ISSN

1075-4512

Publisher

Aspen Publishers, Inc

Language

en-US

Abstract

On February 24, 2004, the Securities and Exchange Commission (SEC) proposed an amendment to Rule 12b-1. In essence, the rule prohibits mutual funds that have adopted a 12b-1 plan from exchanging brokerage business of their portfolios for the distribution of the funds' shares. A decision by the Seventh Circuit in Wsol v. Fiduciary Management Associates (2001) highlights the importance and relevance of the rule. More importantly, the decision demonstrates a basic difference between the view of the Securities and Exchange Commission and the Court on who owns the benefits from allocating portfolio brokerage business. Most importantly, the decision brings home the fundamental difference between the views of the SEC and the Court on the meaning of fiduciary duties.

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