Securities Investment Fund Managers And Duty Of Care Research

There are conflicts in the pattern of fund operation, such as the conflict between issuer and investor, broker and investor, trustee and investor. The most important issue the supervisor authority concerned among them is the conflict between trustee and investor. How to make the trustee concentrate on operational affairs without hurting investor's interest, is the key. There are some adjustments on the duties of trustee under the current Fund Acts in China, but the author thinks it is not enough to protect investor, especially concerns on the duty of care of trustee. So the author made this paper in the following six parts.In the first part, the definition of fund was introduced, and the conception of fund trustee. The author indicated that regulations on the duty of care of trustee are outdated after summarizing the development of fund and relating acts in China.In the second part, the general theory of duty of care of trustee was listed, what is duty of reliance and duty of care were defined. Then the test of it was set out: special relationship, predictability of damage, comity of parties, reasonable obligation. And subjective test was replaced by objective test.In the third part, legal origin of duty of care of trustee was illustrated. It comes from contract law and tort in Continental Law, from contract, tort and equity in Anglo-American Law.In the fourth part, describing the influence of investment theory on duty of care of trustee after listing risks of fund and analyzing representative theories in different stage.In the fifth part, setting out the general test to duty of care of trustee in three aspects: necessity of care, ability and prudence.In the sixth part, the author expressed opinions on specific test on duty of care of trustee in China comparing different countries' regulations: trustee should be allowed to delegate other party to exercise part of power for the efficiency of management; the investment of trustee put on a single stock should be limited to a certain level; the investment of one fund to another need be restricted to a certain level, the trustee of opening fund could not invest on non-listing stock or real estate but closing fund can be put on non-quoted stock; trustee should be prohibited from loan but exception on the aim of better management with certain conditions; fund could be allowed to purchase futures with portion limit, trustee should be encouraged to protect small share holder by acting as share holder.As has been noted above, the duty of care of fund trustee is not only related to legal theory, but also practice, which worth considering in depth.