Disentangling Mutual Fund Governance From Corporate Governance

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Disentangling Mutual Fund Governance From Corporate Governance
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Disentangling Mutual Fund Governance from Corporate Governance

Eric D. Roiter

Boston University – School of Law

Abstract:

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This Article addresses mutual fund governance, explaining how in recent years it has become entangled with the norms of corporate governance. There are two essential features of mutual funds, however, that differentiate them fundamentally from ordinary corporations. First, mutual funds are not only separate legal entities; they are also financial products (or services). Mutual fund investors are therefore both shareholders and customers. This stands, of course, in marked contrast to ordinary corporations, whose shareholders and customers are two distinct and separate groups. Second, mutual funds are fundamentally different owing to the right of redemption, a right of investors to withdraw their ca