Investment Company Act Circuit Split Exposes Mutual Funds

Law360 (August 26, 2019, 2:26 PM EDT) -- The Investment Company Act of 1940[1] regulates mutual funds, exchange-traded funds and certain other pooled investment vehicles. Since 2002, federal courts have refused to find that implied private rights of action exist under the act. Earlier this month, however, the U.S. Court of Appeals for the Second Circuit held in Oxford University Bank v. Lansuppe Feeder LLC that private plaintiffs may bring actions under Section 47(b) of the act[2] for rescission of contracts that violate the act.

As the Second Circuit recognized, its decision conflicts with several other federal court decisions that have refused to find an implied private right of...

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