Regulatory agencies are created to act in the public interest but often end up acting in the interests of those regulated. This is known as regulatory capture. The mutual fund industry is the custodian of massive levels of wealth of the investing public and is regulated by the Securities...

Mutual funds are structurally different from other corporations. The corporation or trust is controlled by an external entity, an investment management firm that profits from fees charged to manage the fund's portfolio. Recognizing this fundamental conflict of interest, in 1970 Congress made...

In the 1960s, the Securities and Exchange Commission (SEC) attempted to correct an oversight in the Investment Company Act of 1940 (ICA) that allowed investment management firms to overcharge investors, namely, the absence of enforceable protections over excessive fees. Congress, in the 1970...

Households in the U.S. invest a large proportion of wealth in mutual funds. At the end of 2014, open-end mutual fund assets were $16 trillion and annual fees exceeded $100 billion. Mutual funds have a unique corporate structure that involves a conflict of interest with the investment management...

It has long been recognized that the forces of arm’s length bargaining do not operate on mutual fund management fees. Beginning with the 1970 amendments to the Investment Company Act (ICA), Congress made mutual fund sponsors fiduciaries where management fees are concerned. This happened...