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Abstract: 

In 2016, a court held that the fiduciary exception to the attorney-client privilege applied to communications between independent trustees of a mutual fund and their independent counsel. The authors take issue with the decision. After discussing the background and case law involving the exception, they find that the rationale for applying it in common law trusts is inapplicable, and its effects may be harmful to shareholders, if applied against independent trustees in lawsuits under Section 36(b) of the Investment Company Act (ICA). They close with suggested steps independent trustees can take in light of uncertainties created by the decision. *This article is adapted, with updates by the authors, from The Review of Securities & Commodities Regulation, © RSCR Publications LLC, and is available for download for Journal of Taxation & Regulation of Financial Institutions subscribers only; no pay-per-article option is available.

Keywords: Investment Company Act of 1940, Section 36(b), mutual fund independent trustees, fiduciary exception, attorney-client privilege, Kenny v. Pacific Investment Management Company

Affiliations:  1: Milbank, Tweed, Hadley & McCloy LLP; 2: Milbank, Tweed, Hadley & McCloy LLP; 3: Milbank, Tweed, Hadley & McCloy LLP.