September 15, 2005

The U.S. District Court for the Northern District of Illinois recently held that the federal Investment Company Act of 1940 does not provide individual fund investors with a cause of action against the directors and advisors of funds within Jenner & Block client, Nuveen Family of Funds, according to an August article in Securities Class Action Reporter

James Jacobs, a private investor, had filed a class action complaint on behalf of all shareholders in a number of Nuveen funds, according to the article.  He alleged that the defendants – individuals acting as mutual fund directors, advisors and affiliates of Nuveen Family of Funds – failed to ensure that the funds participated in dozens of securities class action settlements for which the funds allegedly were eligible.  Specifically, he asserted claims for breach of fiduciary duty and negligence under state law, as well as several violations of the Investment Company Act. 

In July 2005, the court dismissed all of Mr. Jacobs’s federal claims because the Act does not provide a private right of action and, in fact, it limits claims to those brought by the Securities and Exchange Commission.  Although his state law claims were also dismissed by the federal trial judge, the publication noted, they may now be brought in an appropriate state court. 

Partners J. Kevin McCall, Avidan J. Stern and James L. Thompson represent Nuveen Family of Funds in this matter.