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...

Churning involves excessive trading by stockbrokers in order to generate commissions. Current practice uses the turnover ratio to detect excessive trading. The turnover ratio is a flawed indicator of the actual harm of excessive trading which is commissions. This paper examines the intersection...

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...