Should There be (As There is Now) a Different Rule for Institutional Investors?

(c) 2010 F. Bruce Abel

My previous posts on this topic pointed out that banks and other "institutional investors" are just individuals running a lot of money. The corollary is that institutional money is just a collection of money entrusted by individuals, and corporations. Corporations are controlled by individuals, or other corporations. At the beginning there were ... are... er, individuals.

In this day and age a few Paulsons and Goldman Sachs vice presidents can blow up the system. So, remove from the Blue Sky Laws and the federal securities laws the exemptions for "institutional investors." My money manager isn't as smart as your money manager. Or visa versa. Either way, it isn't a good situation. Get rid of the "institutional investor" exemption.