(The news featured below is a selection from the news covered in the Federal Securities Report Letter, which is distributed to subscribers of the Federal Securities Law Reports.)

Fund Directors' Lack of Independence Did Not Excuse Pre-Suit Demand

The status of an individual as an "interested person" under the Investment Company Act does not excuse the pre-suit demand requirement for derivative litigation under Maryland law. Shareholders of a fund claimed directors of the fund's investment adviser were interested persons under the Act and making a pre-suit demand on the directors would be futile. Allegations that the adviser's directors would not authorize a suit against the fund for fear they would lose their highly paid positions were inadequate to excuse the demand requirement.

¨ Scalisi v. Fund Asset Management, L.P. (2ndCir) is reported at ¶92,892 .