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Purpose and Services
This page was last updated on March 12, 2001. Articles by Fund Democracy: Archives Another Chink in the Wall: SEC Grants Self-Dealing Exemption to Goldman Funds, TheStreet.com (Mar. 1, 2001). View the full text of this article. Abstract: If you hired an adviser to make investment decisions for you, would you want him to buy securities for you out of his own account? Probably not. You couldn't always be sure you had gotten the best possible price. And you also wouldn't know whether the advisor recommend a security because it was a good investment or because he wanted to unload it from his account. That's why more than 60 years ago, Congress prohibited mutual fund managers from selling securities to or buying securities from their funds. The SEC granted Goldman Sachs an exemption from self-dealing prohibitions so that it could trade securities with the funds it advises. Ironically, Goldman Sachs is one of the firms whose activities prompted Congress to outlaw such transactions over 60 years ago. The prohibitions against self-dealing are under fire, and the Goldman Sachs exemption signals that the SEC may be succumbing to pressure from the financial services industry to water down the rules. |