ROBERT STROUGO, Plaintiff, - against - BEA ASSOCIATES, Defendant, - and - THE BRAZILIAN EQUITY FUND, INC., Nominal Defendant., 188 F. Supp. 2d 373

Summary

The shareholder contended that the advisory agreement was void since it was not approved by directors who were independent of the advisor. The shareholder alleged that the advisor selected the directors, the directors served on multiple boards which employed the advisor, the directors sought to prevent the fund shareholders from removing the advisor, and the advisor received excessive compensation. The court held that the directors, as natural persons, were presumed to be independent, and the shareholder failed to overcome that presumption by showing that the advisor controlled the directors. While the evidence indicated that the advisor was in a position to influence the directors, there was no showing of actual domination since the indicia of such influence could be reasonably rooted in causes other than control, and there was no evidence of actual pressure applied by the advisor. Further, the shareholder failed to show that the fees charged by the advisor, even if not negotiated at ...