Abstract

http://ssrn.com/abstract=1573768
 
 

Footnotes (33)



 


 



Rethinking the Regulation of Securities Intermediaries


Jill E. Fisch


Institute for Law and Economics, University of Pennsylvania Law School

July 27, 2010

University of Pennsylvania Law Review, Vol. 158, p. 1961, 2010
U of Penn, Inst for Law & Econ Research Paper No. 10-04

Abstract:     
This Article argues that existing regulation of mutual funds has serious shortcomings. In particular, the Investment Company Act, which is based primarily on principles of corporate governance and fiduciary duties, fails to support and, in some cases impedes, market forces. Existing evidence suggests that retail investing behavior and the dominance of sales agents with competing financial incentives further weakens market discipline.

As a solution, the Article proposes that funds should be treated primarily as financial products rather than corporations and, correspondingly, investors should be treated primarily as consumers rather than corporate shareholders. To implement this approach, the Article proposes the creation of a new federal agency that would develop standardized financial products coupled with corresponding disclosure principles. Sellers of retail products would be required either to conform their products to these standards or to explain material differences. The goal is to enhance market discipline while making retail funds less complicated and more understandable for individual investors.

Number of Pages in PDF File: 82

Keywords: Mutual funds, retail funds, Investment Company Act of 1940, financial services regulation, market interference, erosion of market discipline, retail investment behavior, sales agent incentives, consumer protection, standards, standardized financial products, material differences, disclosure

JEL Classification: G23, G28, K22, K23

Accepted Paper Series





Download This Paper

Date posted: March 24, 2010 ; Last revised: July 28, 2010

Suggested Citation

Fisch, Jill E., Rethinking the Regulation of Securities Intermediaries (July 27, 2010). University of Pennsylvania Law Review, Vol. 158, p. 1961, 2010; U of Penn, Inst for Law & Econ Research Paper No. 10-04. Available at SSRN: http://ssrn.com/abstract=1573768

Contact Information

Jill E. Fisch (Contact Author)
Institute for Law and Economics, University of Pennsylvania Law School ( email )
3501 Sansom Street
Philadelphia, PA 19104
United States
215-746-3454 (Phone)
215-573-2025 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 2,125
Downloads: 465
Download Rank: 34,115
Footnotes:  33
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.281 seconds