Abstract

http://ssrn.com/abstract=1427474
 


 



Mutual Fund Conflicts of Interest in the Wake of the Short-Term Trading Scandals: Encouraging Structural Change Through Shareholder Choice


Jeff Schwartz


University of Utah - S.J. Quinney College of Law

Fall 2005

NYU Journal of Law & Business, Vol. 2, No. 91, 2005

Abstract:     
This piece contends that the way mutual funds are typically organized incentivizes fund managers to put their own interests ahead of fund shareholders. It goes on to argue that the legal regime in place to protect investors from such abuse is flawed, and that the late trading and market timing scandals that came to light several years ago, among other harms that shareholders have endured, illustrate the need for substantive reform.

Investors would be best served, I argue, if mutual funds were organized in an alternate fashion - one which alleviates the conflicts of interest motivating management overreaching. The article concludes that a restructuring is possible through informed shareholder choice, but for this to occur the SEC must take steps to create a more knowledgeable investor base.

Number of Pages in PDF File: 55

Keywords: Mutual Fund, Vanguard, Conflict of Interest, Late Trading, Market Timing, Disclosure

JEL Classification: G2, K22

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Date posted: June 30, 2009  

Suggested Citation

Schwartz, Jeff, Mutual Fund Conflicts of Interest in the Wake of the Short-Term Trading Scandals: Encouraging Structural Change Through Shareholder Choice (Fall 2005). NYU Journal of Law & Business, Vol. 2, No. 91, 2005. Available at SSRN: http://ssrn.com/abstract=1427474

Contact Information

Jeff Schwartz (Contact Author)
University of Utah - S.J. Quinney College of Law ( email )
332 S. 1400 East Front
Salt Lake City, UT 84112-0730
United States

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