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Fiduciary Duties of Investment Bankers: Senate Testimony – May 4, 2010

12 Pages Posted: 20 Aug 2010 Last revised: 1 Oct 2010

Larry E. Ribstein

University of Illinois College of Law (deceased); PERC - Property and Environment Research Center

Date Written: August 18, 2010

Abstract

This testimony before the United States Senate Committee on the Judiciary Subcommittee on Crime and Drugs focuses on two issues: to what extent should investment bankers have fiduciary duties to investors? And should there be criminal liability for willful breach of these duties? The testimony concludes that these duties are the wrong tool for dealing with any problems that might exist in the investment banking industry. Fiduciary duties are an amorphous concept which courts and commentators have applied in many different forms to many different types of conduct. Applying these duties to investment bankers would cast a potentially wide net over not only bad conduct but also conduct that should be viewed as clearly legitimate. Moreover, even under a narrow view of these duties, they are inappropriate for most aspects of investment banking. These problems with fiduciary duties would be significantly exacerbated by imposing criminal liability for their breach.

JEL Classification: G23, G24, G28, K22, K23, K42, L51, L84

Suggested Citation

Ribstein, Larry E., Fiduciary Duties of Investment Bankers: Senate Testimony – May 4, 2010 (August 18, 2010). U Illinois Law & Economics Research Paper No. LE10-019; Illinois Public Law Research Paper No. 10-05. Available at SSRN: https://ssrn.com/abstract=1661285 or http://dx.doi.org/10.2139/ssrn.1661285

Larry Edward Ribstein (Contact Author)

University of Illinois College of Law (deceased)

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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