Document Type

Article

Publication Title

Washington University Law Quarterly

Abstract

America's money is managed by professionals.' In this "fourth stage of capitalism,"' ensuring that those who manage our money do so in our interests becomes the critical question. This Article examines that question by focusing on the regulation of the personal trading activities of the managers of tomorrow's dominant institutional investor, mutual funds. In this Article, I examine the regulation of personal trading by money managers as a vehicle for better understanding the bases and strategies for regulating money managers in general. In Part I, after briefly describing the organizational and regulatory frameworks of the mutual fund industry, I describe the regulations governing personal trading by money managers. In Part II, I describe the similarities and differences in the "codes of ethics" adopted by firms to regulate personal trading. In Part III, I examine the private incentives facing both fund managers and their employers, as well as the potential harm facing investors. I then consider the kind of regulation that would be appropriate in light of the nature of the potential harm. In Part IV, I analyze the ICI Advisory Committee's recommendations, and then turn to the SEC's more modest proposals in Part V.

First Page

1601

Volume

73

Publication Date

1995

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