Securities Regulation- Federal Courts-Private Rights of Action Under the Investment Company Act of 1940
Two actions for damages were brought against officers and directors of a mutual investment fund alleging violations of the Investment Company Act of 1940. These actions, by the fund itself and by a stockholder on behalf of the fund, were consolidated in a federal district court. The court denied defendant’s motion to dismiss for want of federal jurisdiction. On an interlocutory appeal by the non-affiliated directors, held, reversed. The Investment Company Act of 1940 does not expressly or by implication create a private right of action cognizable in the federal courts against non-affiliated directors. Brouk v. Managed Funds, Inc., 286 F.2d 901 (8th Cir. 1961), vacated and remanded for dismissal as moot, 82 Sup. Ct. 878 (1952) .