Toward a Mission Statement for Mutual Funds in Shareholder Litigation

Mutual funds own approximately 30 percent of the U.S. equity market, and the Big Three fund families – Blackrock, Vanguard, and State Street – are the largest blockholders in the vast majority of large, publicly traded companies.  This has made mutual funds a force to be reckoned with in American corporate governance.  Mutual funds tout their active engagement in corporate governance and claim to be “good at it.”  But are they?

Traditionally, there are three levers of power in corporate governance: voting, selling, and suing.  Selling is not an option for many mutual funds – especially index funds, ETFs, and … Read more