*For all press release inquiries, please reach out to Nick Sabin (Nick.Sabin@mail.house.gov)

Washington, D.C. - Today, Congressman Tom Emmer (MN-06) introduced the Mutual Fund Litigation Reform Act, which will prevent attorneys from filing baseless litigation designed to abuse the legal system for financial gain. The legislation improves litigation requirements against firms that are already strongly regulated to protect consumers in order to reduce the excessive number of lawsuits that are brought without merit.

"Many Americans’ savings are invested in mutual funds, whether it be in a 401(k) or other retirement accounts. These funds preserve our earnings and help us save for the future," said Emmer. "While legal recourse is sometimes necessary, frivolous lawsuits are all too common. By ensuring that claims have evidence and are worth pursuing, we can support legitimate legal claims as well as increase the stability and growth of the funds that secure our future."

“The Mutual Fund Litigation Reform Act will improve the ability of federal courts to curb abusive lawsuits against mutual fund advisers. Lawsuits brought under Section 36(b) of the Investment Company Act of 1940 waste adviser resources without benefit to investors as evidenced by the fact that no suit brought since Section 36(b) was enacted in 1970 has resulted in a judgement against a defendant adviser. ICI applauds Representative Tom Emmer for his efforts to address this important issue for mutual fund advisers and their investors,” said Investment Company Institute President and CEO Eric J. Pan.


Mutual funds are investment strategies that allow the pooling of money together with other investors to purchase a collection of stocks, bonds, or other securities. Millions of Americans rely on mutual funds. Approximately 56 million households in America own mutual funds. These funds are heavily regulated and are often subject to excessive and unfounded lawsuits known as Section 36(b) suits. This legal recourse is often abused to the tune of millions of dollars - costs which are borne by Americans who rely on mutual funds to diversify their financial portfolio.

Specifically, the Mutual Fund Litigation Reform Act heightens pleading requirements for plaintiff’s attorneys using Section 36(b) of the Investment Company Act of 1940, which grants the SEC and fund shareholders the right to sue a mutual fund adviser for fees believed to be excessive.

Section 36(b) lawsuits can take five years or longer to resolve, and advisers can spend tens of millions of dollars to defend each lawsuit. Filing these lawsuits, however, cost far less. Lawsuit frequently use boilerplate language, and many are settled with cash payments to be resolved.

Congressman Emmer’s bill requires plaintiffs in these Section 36(b) suits to spell out the factual basis for their claims with “clear and convincing evidence.” This standard is used for adjudicating claims under several federal statutes and would curb the growth of lawsuits brought without the evidence available to win on the merits. Mitigating these unworthy claims would limit significant costs in the pre-trial discovery phase of the litigation. 

The Mutual Fund Litigation Reform Act previously passed the House Financial Services Committee in 2018. 

Read the full text of the Mutual Fund Litigation Reform Act here.