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 bears 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, the board's review process, and any disclosure deficiencies, while giving informed board approval appropriate deference. The Court vacated the judgment below and remanded because the lower court had rejected this governing approach and focused too heavily on disclosure and market competition. Justice Thomas, concurring, agreed with the result and methodology but would not characterize the Court's approach as endorsing the prior circuit's formulation.