The Investors’ Control of Their Investment Advisers. Who Has the Final Word?

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel discusses an emerging issue affecting financial advisers—when a client may exercise control over the actions of the adviser. Frankel relates the story of an investment adviser that did not follow the client’s orders to cease certain investments, at a cost of almost $5 million to the client. As Frankel explains, the Securities and Exchange Commission (SEC) got involved, resulting in the investment adviser’s settlement for a significant payment to the client and other conditions.

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Acetris Health, LLC v. United States

Court: US Court of Appeals for the Federal Circuit

Docket: 18-2399

Opinion Date: February 10, 2020

Judge: Timothy B. Dyk

Areas of Law: Drugs & Biotech, Government Contracts, International Trade

Acetris obtains its pharmaceutical products from Aurolife, which makes them in a New Jersey facility, using an active pharmaceutical ingredient made in India. Acetris had contracts to supply the VA with several pharmaceutical products, including Entecavir (used to treat hepatitis B). The VA requested that Acetris recertify its compliance with the Trade Agreements Act of 1979 (TAA), which bars the VA from purchasing “products of” certain foreign countries, such as India. Ultimately, the VA requested that Acetris obtain a country-of-origin determination. Customs concluded that the Acetris products were products of India. Acetris agreed to cancel its Entecavir contract. The VA issued a new solicitation seeking proposals for Entecavir, indicating that it would continue to rely on the Customs determination. Acetris filed suit, challenging the VA’s interpretation of the TAA. The VA awarded the Entecavir contract to Golden, consistent with its policy to award contracts to the lowest-price technically acceptable bid. The government moved to dismiss the suit, arguing that Acetris lacked standing because Acetris would not have won the contract regardless of the interpretation of the TAA and that Acetris’ earlier-filed Court of International Trade suits divested the Claims Court of jurisdiction under 28 U.S.C. 1500. The Claims Court denied the government’s motions and rejected the government’s interpretation of the TAA. The Federal Circuit affirmed in part, holding that the suit is justiciable and agreeing with the Claims Court. The court remanded for the entry of a declaratory judgment and injunction.

Jennissen v. City of Bloomington

Court: Minnesota Supreme Court

Docket: A17-0221

Opinion Date: February 12, 2020

Judge: McKeig

Areas of Law: Constitutional Law, Election Law, Government Contracts

The Supreme Court affirmed in part and reversed in part the decision of the court of appeals holding that a proposed charter amendment was not manifestly unconstitutional but was an improper referendum, holding that the proposed amendment was not an improper exercise of the charter amendment power and was not manifestly unconstitutional. After the City of Bloomington changed from a system of open trash collection to a system of organized collection a group of residents attempted, through an amendment to the City Charter, to require that voters pre-approve a change in the method of trash collection. The City refused to put the proposed charter amendment on the ballot. In the original appeal, the Supreme Court remanded the case to the court of appeals for decision on whether the proposed amendment would violate the Contract Clauses of the United States and Minnesota Constitutions and whether it was an attempt to exercise the voter referendum power through an improper means. On remand, the court of appeals concluded that the proposed amendment was an improper referendum but was not unconstitutional. The Supreme Court reversed in part, holding that the proposed charter amendment was not an improper referendum and did not violate the Contract Clauses.