Jones v. Harris Associates L. P.

Summary

The Court held that liability under §36(b) requires proof that an investment adviser charged a fee so disproportionately large that it bore no reasonable relationship to the services provided and could not have resulted from arm’s-length bargaining. Courts must consider all relevant circumstances, including the quality and cost of services, fee comparisons, and the board’s review process, while giving informed, disinterested board approval appropriate weight. The Court vacated and remanded because the lower appellate court applied a disclosure-focused standard instead. Justice Thomas, concurring, agreed with the result and approach but would not characterize it as endorsing the potentially open-ended fairness review associated with the prior formulation.