RESEARCH EQUITY FUND, INC., Appellant, v. the INSURANCE COMPANY OF NORTH AMERICA, Appellee

This case involves certain fidelity bonds issued to appellant Research Equity Fund, Inc., formerly Winfield Growth Fund (“WGF”), a mutual fund, by appellee Insurance Company of North America (“INA”). Jurisdiction is based upon diversity of citizenship, 28 U.S.C. § 1332 . The District Court held that the bonds did not cover the losses suffered by appellant and entered judgment for INA. We affirm.

I

FACTS

WGF is a Maryland corporation registered as a management investment company under the Investment Company Act of 1940 (“the Act”), 15 U.S.C. §§ 80a-l, et seq. It is subject to the requirements of the Act and to the rules thereunder. On June 15, 1969, the effective date of the bonds in question, Rule 17g-l, promulgated pursuant to Section 17(g) of the Act, required that registered management investment companies maintain a fidelity bond against:

Winfield & Co. was employed under' a management contract with WGF to act as its investment advisor. Winfield & Co. purchased the bonds from INA on behalf of various corporate entities known as the Winfield Complex, of which WGF was a part.

A. Stephen Sanders was an employee of Winfield & Co. assigned to manage various portfolios,…