In yet another interesting twist in the case of the money market fund that broke the buck, the principals of the fund’s investment adviser sued the funds’ independent trustees, claiming that they had a “substantial, if not controlling, role in almost all the conduct with which [the SEC] takes issue.”

The complaint is good reading, detailing the immense amount of pressure on the fund trustees from the fund’s management and from the SEC. Effectively, the principals are asking the court to weigh in on how well the fund board navigated that pressure during an admittedly tumultuous period in the market. Did they move fast enough? Did they put their own interests ahead of those of the fund’s shareholders? And, perhaps most importantly, should the independent trustees be required to return allegedly misappropriated assets to the fund so that those assets can be distributed to creditors and shareholders?

Fund boards, their counsel and their insurance providers may want to watch this case closely.

Read client alert.