In life, any industry has conflicts of interest, and funds are no exception. It is very necessary to know how to prevent conflicts of interest in funds. Bian Xiao arranges the relevant information as follows for reference only.

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Analysis on the reasons of interest conflict of securities investment funds;

Conflict of interest refers to the situation that one's own interests conflict with his fiduciary obligations to others, or that one person conflicts with his fiduciary obligations to more than two people.

According to China's Securities Investment Fund Law, securities investment funds have three related parties: fund investors (fund share holders), fund managers (fund management companies) and custodians (generally custodian banks). The legal relationship among them is based on the trust system, but it has some new characteristics different from the traditional trust relationship: First, the securities investment fund is a self-beneficial trust, so the identities of the principal and the beneficiary in the securities investment fund overlap, and they are both fund share holders.

Secondly, in the securities investment fund, the trustee in the trust relationship has been separated in the fund operation, and the function of managing the trust property is separated from the function of receiving and keeping the trust property, resulting in the corresponding manager who specializes in managing the fund property and the custodian who is responsible for receiving and keeping the fund property. Therefore, in the securities investment fund, the fund manager and the fund custodian are the same trustee. The manager is responsible for the investment management of the fund property, and the custodian is responsible for keeping the fund property and using the fund property for investment activities according to the instructions of the manager. In addition, the custodian is also responsible for supervising the investment activities of the fund manager.

With the diversification of financial business, the business scope of fund managers and fund custodians continues to expand, and the possibility of conflict of interest also increases. Under the separate operation system, most conflicts of interest will occur between the fund manager and the fund property or beneficiary. Under the mixed operation system, the custodian bank, as the custodian, can also engage in other businesses such as securities, so it may also trade with the fund property or beneficiaries, resulting in conflicts of interest. Finally, in today's financial groups, most fund managers do not appear as a single institution, but as affiliated members of large financial institutions or as a collection of many financial institutions. In this case, conflicts of interest will be more common and complicated.

Trust theory basis of legal prevention of conflict of interest

The conflict of interest of securities investment funds is mainly reflected in the conflict of interest between the fund custodian and the fund property or beneficiary. From the perspective of trust law, in order to prevent this conflict of interest, legislators generally protect the interests of beneficiaries through the following two legal system arrangements:

1. Trustee's "fiduciary duty" in law class

In Anglo-American law, fiduciary duty is the principle of trustee's code of conduct, and it is also the key to realize the purpose of trust. In terms of connotation, trust obligation refers to the trustee's test as the substantive manager of trust property or as the trustee. His behavior should proceed from the interests of the beneficiary and bear the obligations that the beneficiary should perform when trusting his behavior, including "duty of care" and "duty of loyalty".

2. Restrictions on conflicts of interest

The trustee is absolutely loyal to the beneficiary under the trust law, that is, the trustee must never put himself in a position that may conflict with the beneficiary, so he should avoid conflicts of interest as much as possible. However, as an "economic man", the trustee has the nature of pursuing the maximization of his own interests. Under this tendency, it is impossible to effectively prevent conflicts of interest only by providing general trust obligations by law. Therefore, legislators in most countries protect the interests of beneficiaries by prohibiting or restricting related conflicts of interest.

Specific types of conflict of interest and its legal prevention

From the perspective of trust law, the conflicts of interest in securities investment funds mainly include:

1. Transactions between the fund custodian or its related parties and the fund property.

The most typical conflict of interest is the transaction between the fund custodian or its related party and the fund property. This type of transaction is essentially unequal, mainly because the identities of fund custodians overlap here, which is not only the actual controller of the fund property, but also the other party to the transaction. It is essentially a "one-person transaction", which easily leads to conflicts of interest and damages the interests of beneficiaries.

2. Transactions between two funds managed by the same fund manager.

Generally speaking, the main business of a fund manager is to set up and manage funds, so a fund manager usually manages multiple funds. Because it is not cost-effective to require fund managers to manage only one fund, it is not conducive to the efficiency of the fund management industry, and ultimately it is not conducive to the interests of investors. However, this structure of "one master and many servants" will lead to two forms of conflicts of interest: (1) the same transaction, that is, two or more funds buy or sell the same securities at the same time or successively. (2) Cross-direction trading, that is, two or more funds buy and sell each other, or two or more funds buy and sell the same kind of securities, one for the buyer and the other for the seller.