Shareholders suffered another in a string of losses in cases they have brought challenging the independence of mutual fund directors.

U.S. District Court Judge Whitman Knapp of New York has dismissed a case that shareholder T. Robert Verkouteren filed against BlackRock Financial Management of New York in which Verkouteren alleged that the BlackRock funds' directors were too closely aligned with BlackRock to maintain their independence. Verkouteren failed to offer any evidence that BlackRock controlled the funds' independent directors, Knapp said in a 10-page decision dated July 16.

Without evidence that BlackRock controlled the directors, Verkouteren's allegations about the inadequacies of fund governance are a matter for Congress or the SEC, Knapp said.

"We are constrained to apply the laws as written and cannot take action where Congress and the SEC have not done so," Knapp said.

Verkouteren's lawyer, Joel Feffer of Wechsler Harwood Halebian & Feffer of New York, was not available for comment. Robert Connolly, general counsel for BlackRock, said the firm was pleased by Knapp's decision. BlackRock has not heard whether Verkouteren will appeal the decision to the Second Circuit Court of Appeals, Connolly said.

Feffer's firm is representing shareholders in five cases challenging director independence. Each case alleges that directors lost their independence because of the compensation they receive for their work.

The BlackRock decision is the first that ends a case, unless there is an appeal. Four other cases - those filed against Prudential Investments of Newark, N.J., T. Rowe Price Associates of Baltimore, Md., Credit Suisse Asset Management of New York and Fidelity Investments of Boston - are pending. In the Prudential, T. Rowe Price and Credit Suisse cases, however, judges have issued preliminary decisions rejecting the merits of shareholder claims. None of those decisions are final, however. There has been no substantive ruling in the Fidelity case, although a judge expressed skepticism about the claims at a hearing April 28.

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