Thanks to Gordon, Usha, Michelle, Larry, and others who've written here and elsewhere on the fiduciary duty issue. I admit to finding it a good puzzle.
But honestly (and with due respect to Gordon and his brush-off of the same), I am a bit with Justice Kennedy on this one as to his "I don't know why Congress didn't use some other word" remark. (Go ahead and laugh again, Gordon. I can see you doing it now . . . .) I do find his confusion about what a fiduciary duty is quite puzzling, even troubling, given that we depend upon the judiciary to determine the contents of fiduciary duties in individual contexts. (Nod to Gordon on all this.)
Let's face it. Congress had options here in fixing the problem created by the lack of independence of investment advisors from the funds they advise, and it seems to me that it punted. Honestly, I am not sure Congress knew what it meant by a fiduciary duty in this context. Why was it not more specific about the obligation owed by the advisor to the fund? Was it ignorance, laziness, sloppiness, reckless or willful abdication, public interest politics, . . . ? I would be interested if anyone has an answer to that question based on a review of legislative history or involvement in the legislative process. I have neither done that review or have that involvement.
If arm's-length bargaining is what Congress intended (as the Gartenberg case seems to indicate), why did Congress denominate the duty as "fiduciary" in nature? Why did it not just articulate a clear objective and a supportive process--or focus its attention and drafting on a (non-fiduciary) duty of some kind--perhaps good faith and fair dealing? An obligation of good faith and fair dealing is read into contracts anyway, so maybe all Congress had to do was define its contents in this context (to avoid a sloppy and often unsatisfying common law analysis that does not take into account the independence issue present here).
Of course, none of this matters to the Court's decision in Jones. Congress didn't use some other word. It used the word "fiduciary." And so, as to the fiduciary duty question before the Jones Court, I come out with Larry on the duty of candor concept.
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