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SIFMA AMG Common Ownership Letter

Summary

The Asset Management Group of SIFMA appreciates the opportunity to provide comments to the United States Federal Trade Commission in relation to the Commission’s hearing #8 on Competition and Consumer Protection in the 21st Century.

SIFMA AMG believes it is critical to highlight for the Commission certain misunderstandings about the asset management industry that have been touted by proponents of a theory of common ownership, which asserts that common ownership inherently leads to anticompetitive effects. We commend the Commission’s efforts to separate fact from fiction by holding Hearing #8, which brought to light some of the potential negative consequences of policy actions in this area.

PDF

Submitted To

United States Federal Trade Commission

Submitted By

SIFMA AMG

Related Committee(s)

  • Asset Management

Date

15

January

2019

Excerpt

William F. Adkinson, Jr.
Attorney Advisor, Office of Policy Planning
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580

Re: FTC Hearing #8 – Competition and Consumer Protection in the 21st Century; SIFMA AMG Concerns Regarding Common Ownership Theory and Suggested Remedies

Dear Mr. Adkinson:

The Asset Management Group (the “AMG”) of the Securities Industry and Financial Markets Association (“SIFMA”) appreciates the opportunity to provide comments to the United States Federal Trade Commission (the “Commission” or “FTC”) in relation to the Commission’s hearing #8 on Competition and Consumer Protection in the 21st Century (“Hearing #8”).1

The AMG is the voice for the buy side within the securities industry and broader financial markets, which serves millions of individual and institutional investors as they save for retirement, education, emergencies, and other investment needs and goals. The AMG’s members represent U.S. asset management firms whose combined assets under management exceed $45 trillion. The clients of SIFMA AMG member firms include tens of millions of individual investors, registered investment companies, endowments, and pension funds.

From this vantage point, we believe it is critical to highlight for the Commission certain misunderstandings about the asset management industry that have been touted by proponents of a theory of common ownership, which asserts that common ownership inherently leads to anticompetitive effects. The common ownership theory and associated empirical findings are predicated upon a faulty understanding of the relationship between asset managers and public companies, as well as a lack of appreciation for the agency nature of the asset management business. When these incorrect assumptions are corrected and viewed in the context of an asset manager’s fiduciary duty, it is clear that the common ownership theory as it relates to asset managers and concerns about competitive harm is far-fetched and unfounded. Indeed, as was discussed during Hearing #8 and further expounded upon in this letter, a number of researchers who have accounted for the empirical and theoretical problems with the initial common ownership research have concluded that the existing empirical evidence is insufficient to support the view that common ownership has anti-competitive effects.

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