Plaintiff-appellant Jeffrey Krinsk is a shareholder in the CMA Money Fund ("Fund"), which is one component of the Cash Management Account program ("CMA program"), a financial services package offered by Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"). He brought this action derivatively on behalf of the Fund against the Fund itself and those MLPF&S-related entities responsible for administering and servicing the Fund. In his amended complaint, Krinsk pleaded violations of sections 12(b), 15(a), 20(a) and 36(b) of the Investment Company Act of 1940 ("Act"), 15 U.S.C. §§ 80a-12(b), 80a-15(a), 80a-20(a), 80a-35(b) (1982), and demanded a jury trial. Krinsk alleges a breach of fiduciary duty in that the fees paid by the Fund and its shareholders are excessive; attacks the 12b-1 distribution plan as being improper; and contends that a proxy statement of the Fund was false and misleading in regard to defendants' profitability and in comparing fees of the Fund with those of another fund.
The district court rejected all of Krinsk's claims, granting pre-trial dismissal of two claims and dismissal of the remaining claims after a bench trial. Krinsk appeals from the final judgment dismissing the amended complaint.
We find no error in the district court's determination that Krinsk failed to prove that the fees are disproportionately large. In addition, we agree with the district court that there can be no private right of action under section 12(b) when the claim is indistinguishable from a section 36(b) claim; that the section 15(a) claim fails because that claim must be asserted by the shareholders rather than the Fund; that the omission in the proxy statement is not material; and that a jury trial properly was denied because the claims sound in equity.
Accordingly, we affirm.
Miner '56, Roger J., "Krinsk v. Fund Asset Management, Inc., 875 F. 2d 404 - Court of Appeals, 2nd Circuit 1989" (1989). Circuit Court Opinions. 263.