The SEC has used a low-profile closed-end fund case to make a point about the powers of fund directors and highlight the value of having independent lawyers advise fund directors.

Funds have the right to sue fund advisers for alleged breaches of fiduciary duty by the advisers, the SEC argued in a recent federal court filing. The Investment Company Act - the key federal law that governs mutual funds - permits funds to sue and also permits shareholders acting on behalf of funds to file so-called derivative actions for alleged injuries that a fund incurs at the hands of an adviser, the SEC argued.

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