Delaware Supreme Court Rules for Benchmark Against "House Sitter" Pacer Advisors in ETF Case

Final Judgment Entered on Remand After Court Rejects Pacer's Claim to Control Benchmark's White-Label ETFs

DENVER, Aug. 17, 2026 /PRNewswire/ -- Benchmark Investments LLC (d/b/a Kelly Benchmark Indexes) ("Benchmark"), an exchange-traded fund (ETF) sponsor and index provider, announces that the Superior Court of the State of Delaware has entered final judgment in its favor on remand in its contract dispute with Pacer Advisors, Inc. The Superior Court order declares that Benchmark did not terminate the parties' ETF Services Agreement, enters judgment in favor of Benchmark on Count I, and reinstates certain breach-of-contract claims previously dismissed under Count II. The case will now proceed to address remaining claims and Benchmark's damages. Benchmark is most notably known for conceiving, creating, sponsoring, and providing the capital and proprietary index for the first data center ETF (Symbol: SRVR) in 2018.

The order implements the April 30, 2026, en banc decision of the Supreme Court of Delaware, which unanimously reversed the lower court's earlier ruling and directed entry of summary judgment for Benchmark on Count I of the Amended Complaint. The Court held: "The Agreement does not authorize Pacer to essentially 'fire' Benchmark and continue hosting the Funds without liquidating and without paying Benchmark." The Funds referenced by the Court are the SRVR and INDS ETFs, which Benchmark grew to over $2.1 billion in assets before Pacer's wrongful termination. Writing for a unanimous en banc Court, the Chief Justice held that a notice of intent to terminate is not the same as an actual termination, and that the Agreement unambiguously permitted Benchmark to propose a reorganization of the ETFs without causing a present termination.

The dispute arose from a white-label ETF arrangement under which Benchmark, as index provider and economic sponsor, paid Pacer to host and service funds tracking Benchmark's proprietary indexes. Benchmark retained exclusive control over the funds and indexes including the contractual right to terminate the relationship. Benchmark sued to enforce its contractual rights after Pacer purported to "accept" a notice of intent to terminate (pending a reorganization) and switched the ETFs to a competing index provider.

Pacer ETFs as the House Sitter

In its opinion, the Delaware Supreme Court used a vivid analogy to explain why Pacer's interpretation of the contract failed:

"Like a house sitter for a house, Pacer serviced the funds but did not control the funds or Benchmark's indexes. Benchmark also had exclusive control over terminating the advisor. The parties' arrangement makes no economic sense if Benchmark had to terminate the Agreement before it could propose a reorganization to replace its advisor. The reorganization was subject to approval by the Trust. To terminate the Agreement first would mean that Benchmark's capital investment and future profits were lost if it sought to replace its service provider and the Trust did not approve the reorganization. In other words, the house sitter would end up owning the house."

Sidley Austin LLP, which represents Benchmark, described the significance of the ruling:

"The en banc decision establishes Pacer's liability for improper termination, and the case will now proceed to determining Benchmark's damages, which are potentially well in excess of US$100 million. In addition to being commercially important to Benchmark, the decision is broadly significant to the ETF industry and provides important guidance on contract interpretation under Delaware law."

Taken together, the Delaware Supreme Court's decision and the Superior Court's order on remand reinforce a principle at the heart of the white-label ETF model: the party that conceives, funds, and sponsors a fund, and controls the underlying proprietary indexes and ETFs, cannot be displaced by the service provider that it hired to host it. For Benchmark, the ruling vindicates years of investment in proprietary, research-driven index construction, the same discipline reflected in the performance of Benchmark's proprietary indexes, including the SRVR Index. As the case moves to address the remaining claims and Benchmark's damages, Benchmark remains focused on what it has done since its founding: building rules-based indexes and ETFs that deliver differentiated, specific exposure for investors, while helping to establish the legal guardrails that protect sponsors and index innovators across the ETF industry.

About:
Benchmark Investments LLC (d/b/a Kelly Benchmark Indexes) is an independent index provider and ETF sponsor dedicated to rules-based, research-driven strategies. For more information, visit BenchmarkInvest.com.

Important Disclosures

Litigation statement: This release describes a ruling on liability. No damages have been determined and no monetary award has been entered. The reference to potential damages in excess of US$100 million reflects a statement by Benchmark's outside counsel and is an estimate, not a court finding or award. Litigation outcomes are inherently uncertain.

SOURCE Benchmark Investments LLC