Market Discipline and Fund Governance

• Main Authors: Jonathen Xu, 許朱賢
• Other Authors: Yihone Xie
• Format: Others
• Language: zh-TW
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/93424017466016912568

碩士 === 東吳大學 === 法律學系 === 93 === This research is composed of six parts as follows. Part I unveils mutual fund scandals, related settlements and legislations in the US since 2003. Moreover, investment trust corporations in Taiwan were sanctioned by the authority. Giving the fact of these cases, author evaluates public confidence in market. Part II contours Taiwan’s mutual funds. This research introduces history, presents situation and predicts future on the domestic fund industry. Let alone controversies among investment trust contracts and legal schemes behind are also specifically discussed. Part III depicts legal structure of US mutual funds. Comparing structures between Taiwan and US funds, this research introduces mechanism of external management and statutory institutions involved, including investment advisers, principal underwriters, custodians, and independent accountants. ”The Scandals in Practice” is the Part IV. On the basis of the agency costs and conflicts of interests, this paper categorized the possible fund scandals for four types, i.e., excessive fees, portfolio abuse, late trading and short-term trading (also referred as market timing). Part V discusses the “US Efforts on Anti-Manipulation”. In view of the importance of market discipline and soundness of fund governance, this research reminds of the US regulatory mechanism. To be specific, it contains to forbid self-dealing, to authorize independent directors for the benefits of investors, and to promote disclosure in order to alert officials. Part VI comes to the conclusion, titled as “The Present Legislation and Future Legal Construction in Taiwan”. Following the analysis of American efforts and comparing with the present legislation in Taiwan, this paper research addresses several suggestions on fund governance. To be specific, it is unreliable to employ custodians or independent directors as the mechanism of supervision on investment advisers. It is to be advised that status for the parties in an investment trust contract should be further examined. The last but most significant, the disclosure requirements on fees and expenses, portfolios, short-term trading and proxy voting are yet to be emphasized.