It's a conflict of interests,
prohibited by law, for the same entity to manage the investments and get
a brokerage commission, for the same reasons it's now illegal for a
Justice of the Peace's salary to be a percentage of the traffic fines
the JP imposes.
3: Paragraph 12 What happens in many companies is that a few,
usually senior management, employees are the trustees for the fund, so
they make the investment decisions, and the fund has a broker who buys
and sells as directed by the trustees. That's the theory, at least, but
what often happens is the committee of trustees don't know enough, or
have enough time outside of their work, to make investment decisions, so
they take the broker's advice, and that's not necessarily bad. But to
keep the brokers honest, trustees with good sense often deal with
several brokers and play them off against each other, and that's
free-market competition and good for everyone except the greedier
brokers.
3: Paragraph 13 What Hutton wanted was to become trustee for the
pension funds, so it could collect the trustee's fee for managing the
investments, and hire only itself as broker, so it could continue to
collect the brokerage commission on every transaction. It's like the
way they used to catch monkeys for zoos, where they would cut holes, a
tad bigger than a grown monkey's paw, in coconuts, empty them out, put
some dried rice inside, and chain them to a tree trunk; at night the
monkeys would come, reach inside for the rice, not be able to get their
fists out, and be sitting there with their paws stuck in the coconuts in
the morning, when the hunters would come throw a net over them.
Pages:
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59