I. Interpretation of the phenomenon of "insider control"

The so-called "insider control" phenomenon refers to the fact that managers who are independent of shareholders or investors (outsiders) have mastered the actual control power of the enterprise, fully embody their own interests in the company's strategic decision-making, and even all internal parties join hands to seek their own interests, thus overstepping the control and supervision of the owners and infringing on their rights and interests.

"Insider control" risks. It was put forward by Aoki Masahiko of Stanford University in the United States in view of the unique situation of socialist countries in the Soviet Union and Eastern Europe. It refers to the phenomenon that managers and workers of former state-owned enterprises gained a considerable part of control rights in the process of corporatization of enterprises.

Securities investment funds stipulated many obligations for fund managers in the trust deed. However, the essence of the principal-agent relationship between fund holders and fund managers determines that on the issue of the rights of fund assets, There is the separation of ownership and management right, and then there is the risk of "insider control".

The so-called "insider control" risk of securities investment funds refers to the fund holder as the principal, whose goal is to maximize the investment income of fund assets, while the fund manager as the agent, whose goal is to maximize personal income, and their goals are not consistent.

Due to the inherent defects of contractual securities investment funds, That is, the fund holders are highly decentralized. Fund investors have no say in the important investment decisions of the fund, and they cannot effectively supervise and control the fund managers. Therefore, the fund managers (that is, insiders) actually have the control over the fund assets. Therefore, the interests of fund holders are infringed upon by fully pursuing their own interests in fund investment decision-making. < P > Second, the analysis of factors and countermeasures for the phenomenon of "insider control" in securities investment funds < P > The professional quality of fund managers, especially professional ethics, has a great influence on the interests of investors. Therefore, we must introduce a competition mechanism among fund managers. Let investors have more choices. Let's discuss the countermeasures by analyzing the factors that cause the insider control of securities investment funds. < P > 1. The separation of ownership and management rights of fund assets is the internal factor that causes the risk of insider control. < P > The modern corporate system has two major characteristics, one is the corporate property system, and the other is the corporate governance structure. For securities investment funds, it is impossible to directly operate and manage because of the large number of investors. It can only be managed through a corporate governance structure, that is, the fund holder hands over his assets to the fund manager for management and use, and then to the fund custodian for custody. That is, the ownership and management rights of securities investment funds are separated in organizational form, that is, securities investment funds contain the inherent conditions for the emergence of "insider control". And in China, The main sponsors of most funds are also the sponsors and shareholders of fund management companies, because according to the current operating mechanism of China's securities investment funds, the fund managers are selected by the fund sponsors, which causes the main fund sponsors to subscribe for funds with a relatively small sponsor (the sponsor owns 3% of the shares of the securities investment fund as the holder, about 6 million). A huge annual fund management fee (about 5 million yuan) can be obtained steadily.

Obviously, there is no competitive mechanism in the selection of fund management companies. At this stage, investors are faced with not only the risk of managers' management level, but also the professional ethics risk of managers at all times. Because fund management companies are basically established mainly by large securities companies or trust and investment companies, There are various interest relationships between fund management companies and their controlling shareholders in personnel and related party transactions. Therefore, fund managers are likely to use fund assets to serve their controlling shareholders, and the ultimate damage will be the majority of fund holders. From the above analysis, it can be seen that not only is the separation of ownership and management rights of fund assets inherently triggered "insider control", The operating mechanism of China's securities investment funds also facilitates the operation of "insider control" externally. How to prevent the operation of this bad system is discussed from the following aspects.

(1) Adjust the separation of ownership and management rights. Because investors are extremely dispersed, if investors have management rights, the cost may not be worth the loss. We try to discuss it from the fund management company. A, Let the fund company have partial ownership: B. Elect the representatives of fund holders (excluding sponsors) to station in the fund company to supervise the operation of the fund manager as an independent supervision department, and write the corresponding rules and regulations into the trust deed of the Fund.

(2) Reduce the internal relationship between fund sponsors and fund management companies, and avoid the possible joint operation of funds and securities firms.

(3) Relax the standards for the establishment of fund management companies. Introduce competition into management companies. The establishment of management companies first requires the credit information of fund management companies and sponsors. According to the Interim Measures, the establishment of fund management companies should meet seven conditions, which stipulates that "the paid-in capital of fund management companies is not less than 1 million yuan, and the paid-in capital of each sponsor is not less than 3 million yuan". Compared with mature foreign management companies, the domestic credit requirements for fund management companies are stricter. This is of great practical significance to ensure the internal quality of the fund management companies in China, which have just started. However, in the long run, this strict regulation will also make many companies, even some securities companies and trust and investment companies with good credit standing and outstanding performance lose opportunities, which is not conducive to fair competition, the healthy development of fund management companies and the long-term development of China's fund industry. Here, the author suggests relaxing the establishment standards of management companies and putting those with strong operational capabilities, It also standardizes law-abiding companies to absorb securities investment funds, a new financial field, and promotes the development and growth of the whole fund industry.

(4) Choose fund management companies through market competition and bidding, so that excellent fund management companies can manage more funds. < P > 2. The fund operation structure is unbalanced. Decentralization of fund ownership is an important factor that causes the risk of "insider control".

The investment contract of securities investment funds stipulates the rights and obligations of fund holders (investors), fund managers and fund custodians. Both fund holders and fund custodians can supervise the fund managers, but due to the high decentralization of fund investors, investors' supervision over the fund managers is only to attend the fund holders' meeting. Investors' supervision of their own assets operation is ex post facto, which has great lag and weakness. However, fund custodians' supervision on behalf of fund holders has great limitations. On the one hand, in order to strengthen cooperation with fund managers, fund custodians are restricted by their own interests and regard their rights as chips, which may turn a blind eye to fund managers' violations for their future dominance; On the other hand, the supervision system of fund custodians is not perfect. Without upper-level supervision, it is just a kind of credit transaction. Moreover, there is no explanation on the conditions of supervision and implicit supervision in China, and there is no penalty problem. Constraints and counter-constraints are not established. It can be said that domestic fund custodians rarely do things strictly according to regulations. There is an imbalance in the fund governance structure. We can only hope on the professional ethics of managers. < P > 3. The asymmetric distribution of fund information and the fund holders' insufficient right to know about the fund managers' investment operation are another source of the risk of "insider control". < P > Because of their professionalism and the organizational composition of management companies, fund managers have more information about asset management, while fund holders are extremely scattered and know less information, which objectively forms asymmetric information distribution. In the case of "separation of the two powers", there are also obstacles for fund holders to obtain full information about the fund manager's investment operation:

First, the cost of monitoring, that is, the agency cost in the principal-agent relationship.

Second, the security of information announcement. For the sake of the security of fund operation, In a certain period of time, they will refuse to release information about fund operation to fund holders.

Third, the information is untrue. When fund managers use fund assets for their own personal gain, they may provide false information to fund holders in order to avoid the monitoring of fund holders.

So, how can we overcome the inherent defects of such funds? Generally speaking, incentive mechanism and supervision and restraint mechanism can be adopted.

4. Discussion on countermeasures

In the spirit of research, the author makes some discussions on the scheme and policy provisions of incentive mechanism and supervision and restraint mechanism.

First of all, from the perspective of incentive mechanism, it is to let fund managers share the risks caused by asymmetric information distribution, that is, to link the interests of fund managers with fund returns. However, it is a great pity that, China's securities investment funds have not done much in establishing an incentive mechanism. The main means is that the fund management company collects the fund management operating expenses at a certain proportion (such as 2.5%) according to the net value of the fund assets, but the fund managers and investment experts have no incentive for any interests, no profit sharing, no shares in the fund management company, and no stock options purchased by the fund management company. In this way, it is very likely that investment experts will form alliances and conspire to make profits.

Before designing the incentive mechanism scheme, I think it is necessary to explain the characteristics of China's stock market and the allocation of securities investment funds:

(1) Due to the constraints of the stock market size, operational norms and supervision system, It is possible for fund managers to manipulate the stock price and the net asset value of the fund to obtain high management fees.

Because the scale of China's stock market, especially the tradable stock market, is still relatively small and there are still many defects in market supervision, it is entirely possible for large institutional investors such as securities investment funds to manipulate the stock price and the net asset value of the fund. Take a fund with a scale of 2 billion yuan as an example, if it invests 1% of its assets in a stock, It will reach 2 million yuan. In this way, for stocks with a total market value of 2 billion yuan and 3% of tradable shares, securities investment funds may control one-third of the tradable shares of the stock, and some well-known illegal operation methods (such as knocking, joint manipulation, making false news, etc.) will be enough to affect the market price of the stock. If the fund manager manipulates the net value of the fund assets by means of evil speculation, the fund holder will not only have to pay too much management fees. At the same time, we must bear the market risks and legal risks caused by this. The fundamental solution to this situation should not only focus on the fund industry, but the fundamental measure lies in the standardization of the entire securities market. The strictness and perfection of the whole supervision system.

(2) The extraction standard of fund management fees should give full play to the incentive function. At present, the remuneration of managers of most funds is accrued at the annual rate of 2.5% of the net asset value of the fund (there are also some funds that are accrued at the annual rate of 1.5% plus performance remuneration), which will inevitably affect the distribution of fund income. Fund managers will try to postpone the distribution of fund income for their own benefit. This may conflict with the interests of fund holders.

(3) Some preferential policies given by the government to the fund industry enable the fund to enjoy excessive monopoly profits. For example, placing new shares on the fund makes it easy for the fund to have huge profits, which does not give the fund market space and is not conducive to the growth of the fund industry.

Based on the above analysis, we propose the following schemes.

Scheme 1, The remuneration of fund managers is based on a certain low percentage (such as 1.5%) of the fund's net asset value, and the performance remuneration is extracted every year according to the fund's market performance relative to the same period. The extraction of performance remuneration can adopt a progressive ratio. For example, a certain relative percentage exceeding the market performance, such as 1%, is extracted as 1% of the excess income, and the income exceeding 1-2% is extracted as 15%, exceeding 2-5%. More than 5% of the fund will be withdrawn by 25% of the excess. Obviously, this aspect can ensure that the fund manager can obtain a certain basic income according to the net asset value of the fund under management; On the other hand, it encourages fund managers to pursue the maximization of fund returns and higher excess profits as far as possible. It can be said that this scheme has been recognized by investors and most fund managers. For example, 12 funds issued in June 1999 all adopted the 1.5% fixed management fee and performance extraction method. Moreover, many former fund managers (such as fund Hansheng, Tongyi, Pratt & Whitney, Jinghong, Taihe, Jintai, Kaiyuan, Xinghua, Anxin, Yuyang, etc.) also spontaneously adjusted their managers' remuneration, from the original annual management fee of 2.5% to the fixed annual fee rate of 1.5%. < P > This incentive scheme can be said to have its advantages. Because the remuneration based on performance can promote the fund to increase the second level. In order to get more income. However, due to the regulatory system and the quality of fund managers, this has increased the shock of the secondary market to a certain extent, causing extremely bad effects.

In order to pursue profits, various funds have degenerated the investment concept promised at the time of IPO, which should really attract the attention of management, strengthen supervision, strengthen the standardization of operation, and strengthen the self-discipline and legal construction of the fund industry.

Generally speaking, This scheme has not fundamentally given long-term incentives to fund managers, which has caused possible speculation. If it can be improved in this respect, this incentive mechanism will have more potential for development.

Scheme 2, fund managers' remuneration is encouraged by options.

Stock options have been widely popular in the market, which can be said to be an extremely effective incentive method. It is essentially a selective option. It is the right to buy the company's shares at a given price in the future. It effectively combines the interests of managers with the interests of the company, avoids the short-term behavior of managers, and better solves the incentive problem of managers (agents). Because the existing funds are generally closed for 15 years, there is a basis for the existence of option system. Based on this connotation of stock options, the author borrows the idea of the inherent long-term incentive and restraint mechanism of stock options. Here, the option incentive scheme is proposed for the fund manager's remuneration.

The fund manager draws a fixed-rate remuneration at the annual rate of 1% of the fund's net asset value, and draws a performance remuneration at 2% of the excess when it exceeds the bank's one-year fixed deposit interest rate for the same period by more than 2%. Since the fund's net asset value contains unrealized profits, in order to prevent the fund manager from speculating on the fund's net asset value, Long-term incentives should be given to fund managers. The specific scheme is as follows: when the fund is issued, the fund reserves 1% of the fund units for option incentives to the fund managers. The fund managers have an opportunity to exercise once a year. That is, if the fund exceeds 2% of the market performance in the same period, it can obtain .83% of the fund size at the lowest price between the fund issue price and the fund net asset value. After two years, it is allowed to circulate 5%. Full circulation is allowed after three years. If it exceeds 3% of the market performance in the same period, the fund manager can subscribe for .83% of the fund size at 9% of the fund issue price or the lower of the fund NAV. If the fund performance is lower than the market performance in the same period, the fund manager can only subscribe for 15% of the fund issue price or the lower of the fund net asset value. This is the case every year until the 12th year. In the 12th year, the fund can subscribe for .87%.