Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, March 23, 2009

SEC's Investment Management Director Addresses ICI Conference

Andrew J. Donohue, Director, Division of Investment Management, SEC, gave the Keynote Address, Investment Company Institute, 2009 Mutual Funds and Investment Management Conference, on March 23, 2009.

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This was a great speech delivered by Director Andrew J. Donohue. Though one issue that is continually left out of the fund discussion is protecting unsophisticted shareholders from consistently poor performance.

There are numerous fund families that have consistently underperformed the market and their peer groups in good times and bad. You would think that capitalism or efficient markets would effectively wind these funds down through time as shareholders withdraw their money in disappointment. Generally, this is not the case. These mutual fund family are more about distribution of their products (then sound research or competence), offering fees to the next sales professional to push and keep pushing their product to the next investor. Most of the investors in these funds are smaller and financially unsophisticated.

There must be a system in place to protect these shareholders of funds and familiy of funds that consistently fail from a performance perspectice but are fantastic marketers and distributors.

Brian Callahan
New York, NY

Posted by: Brian Callahan | Aug 18, 2009 7:33:59 AM

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