Currently Mandated Myopia of Rule 10b-5: Pay No Attention to That Manager behind the Mutual Fund Curtain, The

This Article examines the current state of the Rule 10b-5 right of action following a constricting trilogy of Supreme Court cases that have rendered it a myopic remnant of the right previously endorsed by the United States Securities and Exchange Commission (the “SEC”) and hundreds of courts over a span of numerous decades. The Roberts Court’s pronouncement in Janus Capital Group, Inc. v. First Derivative Traders has generated an immense amount of criticism and a slew of conflicting lower court decisions. By effectively abolishing most private Rule 10b-5 claims against secondary actors, including lawyers, accountants, credit rating agencies, underwriters and securities analysts, and by mistakenly including mutual fund investment managers in the class of ordinary secondary actors, the Court has chosen a short-sighted, ill-reasoned standard that ignores the doctrinal foundations of the Securities Exchange Act of 1934 (the 1934 Act ), as well as the practical realities and traditional bases of mutual fund law and practice

Dancing with the Derivatives Devil: Mutual Funds\u27 Dangerous Liaison with Complex Investment Contracts and the Forgotten Lessons of 1940

This Article examines the implications of the drastic increase in the use of complex derivative instruments by mutual funds and the inadequacy of the current statutory and regulatory framework to protect investors. With a series of derivatives disasters and with ninety-four percent of individual mutual fund investors saving for retirementemphasize the need for prompt reform. The 1940 Act was not designed to address complex derivative instruments utilized today and actually prohibits most derivative transactions by mutual funds. Further, the SEC has never engaged in any rulemaking with respect to derivatives transactions by mutual funds. Thus, reforms must be enacted to prevent the types of egregious harms to investors and the financial markets that the 1940 Act was designed to prevent, while preserving the benefits that derivatives trading can offer