There is no question that the distinction between this case and those cases where the retirement of trustees was with a view to purchase is a valid one. Implicit in this judgment is the recognition that there is no absolute rule against self-dealing. The willingness of his Lordship to look at the reality is consistent with the approach of the court in Holder and the recent application of the no-conflict rule in other contexts.
If the broader approach of Holder is adopted, it must be a question of fact whether a trustee in a unit trust can purchase. The court may take into account the fact the trustee does not participate in the decision to make the sale. Read the rest of this entry »
`It is a rule of universal application that no one having [fiduciary] duties to discharge shall be allowed to enter into engagements in which he has or can have a personal interest conflicting or which possibly may conflict with interests of those to whom he is bound to protect. Thus, the trustee or the manager is under a duty not to place itself in a position where there is an actual conflict of interests or where such conflict may potentially exist.
It follows from this general rule that a trustee or a manager must not enter into ’self-dealing’ transactions.” Except where market usage permits, the courts have never permitted a fiduciary, in the course of the same transaction, to approbate and reprobate on its undertaking by acting as a fiduciary on the one side, and as an undisclosed principal in its private capacity on the other. Read the rest of this entry »
Under this rule, a fiduciary has to account for all gains obtained by reason of its position, or through an opportunity or information resulting from it.
A fiduciary may not obtain and retain secret gains. Thus, in a transaction that would be effected between a unit trust and a third party, the manager cannot interpose a nominee to deal with the trust first and arrange for this nominee to consummate the transaction with the third party at a profit. Any such profits must be accounted for. A fiduciary also cannot take any bribe or secret commission. Read the rest of this entry »
- Allocation of trades among sister funds When a single investment manager is responsible for a number of funds, the tradingfunds usually is consolidated in a single trading department or trading desk. Maintaining multiple trading desks for separate funds would be expensive and inefficient for the management firm, besides raising questions from a fiduciary perspective. If trading is not pooled, it might be difficult for the investment manager to avoid favoring one fund over another in trading a given stock. If trades for one fund were completed ahead of trades for another fund, the later trading fund would have to bear the market impact of the earlier-trading fund.
Read the rest of this entry »
