Risk, Regulation, and Investor Protection: The Case of Investment Management

by Julian Franks, Colin Mayer

Overview

This authoritative study of the investment management business focuses on the use of capital requirements for investment managers as a means of investor protection. Commissioned by the Investment Management Regulatory Organization and drawing on extensive discussions with investment managers, it provides a comprehensive account of how the investment management business is organized and identifies its inherent risks. The authors examine the cause and incidence of market failures as well as the dangers to investors through mismanagement and malpractice, and provide an extensive treatment of fraud, with a full listing of British fraud cases since the early 1970s. The report concludes with a summary of the risks faced by investors and recommendations for appropriate forms of protection; and, on the basis of existing regulatory structures in the United Kingdom and the United States, proposes an alternative structure in accordance with the authors' analysis.

Product Details

ISBN-13:	9780198233152
Publisher:	Oxford University Press
Publication date:	03/22/1990
Pages:	240
Product dimensions:	5.69(w) x 8.81(h) x 0.83(d)

Table of Contents

	List of Figures	xi
	List of Tables	xiii
	Terms of Reference of the Report	xv
Chapter 1	Introduction	1
Chapter 2	The Investment Management Business	6
Chapter 3	Risks in the Investment Management Business and their Effect on Investors	31
Appendix I	Survey of Investment Managers	58
Appendix II	A Simple Model of Operational and Financial Risk	68
Chapter 4	Past Cases of Failure in the Investment Management Business	71
Appendix	Case Studies	92
I	McDonald Wheeler Fund Management Ltd	92
II	Norton Warburg Group Ltd	98
III	Halliday Simpson-Arbuthnot Latham	107
IV	Farrington Stead-Hedderwick, Stirling, Grumbar and Co.	111
V	Jessel Securities	114
VI	Slater Walker Securities Ltd	118
VII	M. L. Doxford and Co. Ltd	126
Chapter 5	Different Motives for Regulation: A Survey of the Literature	134
Chapter 6	Market Failure and Investor Protection	145
Chapter 7	Capital Requirements in the UK and USA	172
Chapter 8	Summary and Conclusions	199
	References	221
	Index	223