The Fiduciary Principle and the Best Interests of Average Retail Investors 

The Securities and Exchange Commission recently offered a full-throated explication of its premise that investment advisers are subject to a federally imposed fiduciary standard under the Investment Advisers Act (IAA).[1]   The premise, grounded in cryptic Supreme Court dicta, served as a basis for some to advocate that broker-dealers should be subject to a similar standard in providing personalized securities recommendations to retail investors.  This concept gained statutory traction in the Dodd-Frank Act, but was never codified.  After a long and tortuous path, however, the SEC finally adopted a compromise two years ago in lieu of mandating a strict fiduciary … Read more

Can Corporate Governance Be Commoditized?

Shared series trusts – an entity structure of recent vintage used in organizing mutual funds or exchange traded funds – are a strange species in the world of business entities.  Simply put, such entities are designed to provide governance in a commoditized form.  Essentially, the structure permits a participating business to outsource governance issues by assigning governance of the business to an “off-the-rack,” or, more precisely, “ready-to-serve,” board of directors. This type of arrangement would be counterintuitive for most corporate law scholars since the board typically occupies a position of primacy in the affairs of any business[1] (i.e., governance … Read more