Life Before Strict Investment Regulation

by David Jenyns on November 5, 2008

Some were deficient in their failure to reveal the method of computation of profits or losses upon sales of securities (i.e. whether based upon average cost; first-in, first-out; or on the identified security basis). Similarly, inadequate analyses of surplus accounts in published reports led to the concealment of substantial realized losses.


The fixed investment trust flourished for a short time. Since 1931, sales and creation of new fixed trusts have been negligible. The fixed investment trust is defined as a vehicle in which the investor acquires an undivided interest in a relatively fixed list of securities, together with certain accumulations which are deposited from time to time by a depositor corporation with a trustee, usually a bank or trust company, for the benefit of the holders of the certificates for trust shares. Most fixed trusts were of the unit type, i.e., the deposited securities were deposited in units each identical with every other.

A study published in 1937, preceding the report of the Securities and Exchange Commission summarized the reasons for the weakening of the so-called fixed trust or “unit-type trust.”

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