Washington University Law Review Volume 73 Issue 4 January 1995 Foxes and Hen Houses?: Personal Trading by Mutual Fund Managers Edward B. Rock University of Pennsylvania Follow this and additional works at: https://openscholarship.wustl.edu/law_lawreview Recommended Citation Edward B. Rock, Foxes and Hen Houses?: Personal Trading by Mutual Fund Managers, 73 WASH. U. L. Q. 1601 (1995). Available at: https://openscholarship.wustl.edu/law_lawreview/vol73/iss4/3 This Article is brought to you for free and open access by the Law School at Washington University Open Scholarship. It has been accepted for inclusion in Washington University Law Review by an authorized administrator of Washington University Open Scholarship. For more information, please contact
[email protected]. FOXES AND HEN HOUSES?: PERSONAL TRADING BY MUTUAL FUND MANAGERS EDWARD B. ROCK* INTRODUCTION America's money is managed by professionals.' In this "fourth stage of capitalism,"' ensuring that those who manage our money do so in our interests becomes the critical question. This Article examines that question by focusing on the regulation of the personal trading activities of the managers of tomorrow's dominant institutional investor, mutual funds. Institutional investors are a varied group-public and private pension funds, life insurance companies, commercial bank trust departments, charitable trusts and mutual funds. An unanticipated consequence of the Employee Retirement Income Security Act's ("ERISA") full funding requirement," only now becoming clear, is that mutual funds are and will continue growing at the expense of traditional pension funds.4 ERISA's requirement that pension liabilities be fully funded has had the effect of driving money away from traditional defined benefit pension plans6 * Professor of Law, University of Pennsylvania Law School.