Securities Investment Trust Fund Governance: The Fiduciary Duty and Independent Entity

• Main Authors: Huei-Huei Lee, 李慧慧
• Other Authors: Ming-Jye Huang
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/52020986642171596434

碩士 === 國立臺灣大學 === 科際整合法律學研究所 === 102 === As a kind of portfolio management and risk diversification vehicle, Security Investment Trust Fund has become an indispensable investment tool and plays influential roles in asset management and financial market. However, no matter the fund structure is corporate or contractual, the separation of the ownership of the funds carries the potential for the interests of the fund managers and investors to diverge. From the perspective of theory of Institutional Economics, the “principal-agent” relationship under the assumptions of self-interest and limited rationality, the long term and incomplete contract will induce the conflict of interest between fund managers and investors. In order to prevent fund assets and investors from losses due to fund manager’s malfeasance or negligence, the IOSCO has announced several reports to emphasize the core principle of fund governance is to provide a framework for the fund operation and to ensure fund structure is organized and operated efficiently and exclusively in the interests of investors, not the fund affiliates. The most critical and important regulatory regimes to insulate investors form conflict of interest are imposing the Fiduciary Duty with limitation or prohibition on business conduct and establishing the Independent Entity to oversee the fund operations. The purpose of this thesis is to making fundamental legal analysis of Fiduciary Duty and regulatory framework like Independent Entity to oversee fund operation. The late years fund scandals has deeply shaken the investors’ confidence in our security investment trust fund industry. This legal study attempts to generalize the fund governance principles addressed by IOSCO and compares the fund structure, legal system, and legislation among United Stated, United Kingdom, and Japan. By studying the law and regulation imposed on the breach of fiduciary duty and the organization of different fund structures, this thesis provides conclusions and suggestions to our Securities Investment Trust Fund legal system as follows: 1. Introduce corporate-structured funds and require independent regulatory organization to oversee mutual funds, such as Independent Directors. 2. Enhance the independence and effectiveness and impose reasonable monitoring rights and fiduciary duties on depository. 3. Improve fund fees disclosures and transparency of broker’s compensation of funds. 4. Revise laws and regulations related conflict of interest to encompass and categorize the activities giving rise to affiliated parties’ fund transactions including principal transactions, joint transactions, and agent transaction. 5. Introduce the legal remedy mechanism of Disgorgement to force the fund managers to return back profits due to illegally and wrongful acts. 6. Take the Prudent Investor Rule developed from US. Trust Law for reference to fulfill the duty of care content of fiduciaries, and apply the rule giving investors risk management oriented asset management service.