Courts Dismiss Class Actions Over Mutual Fund NAV Accounting Practices
What happened
Courts in Delaware and New York dismissed parallel putative class actions challenging mutual fund Net Asset Value (NAV) accounting practices. The lawsuits, which asserted claims under the Securities Act of 1933, alleged that equity mutual funds misstated NAV by treating accrued dividends and realized capital gains as assets rather than liabilities. In the Delaware case, plaintiffs conceded that the challenged accounting method was well-recognized in the industry and did not violate GAAP or SEC regulations.
From mondaq.com
Why it matters
The decisions establish that Securities Act claims cannot be based solely on challenging a disclosed and accepted NAV accounting method. The rulings are noted as victories for advisers to registered funds.
From mondaq.com
Who's involved
- FIRST EAGLEFirst Eagle, which was subject to a class action lawsuit in Delaware.
- New YorkState of New York, where a parallel class action was brought against JPMorgan Trust I.
- DelawareState of Delaware, where the class action against First Eagle was dismissed.
- Victory CapitalVictory Capital, which acquired First Eagle.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- FIRST EAGLESpeculative
First Eagle could see reduced legal costs and litigation risk due to the court dismissal.
- Victory CapitalSpeculative
Victory Capital might see reduced litigation risk for its subsidiary due to the court dismissal.
- DelawareSpeculative
Delaware may see reduced legal risk and litigation costs from the dismissal of the class action.
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The entities involved
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New York
state of the United States of America
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Delaware
state of the United States of America
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FIRST EAGLE
Czech company
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