Traditions

Before the invention of computers, financial practices were conducted with reliance upon tangible forms of security and personal insights into the character of those who were pledging collateral. Digitization of securities, currencies and recordkeeping has created new traditions, with new regulations. Examining the evolution of financial market traditions over time helps us understand how we should conduct business in the 21st Century realm of digital innovations like blockchain and distributed ledgers.


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Tuesday, May 12, 2015

The Origins of Trusts and Fiduciary Duties

Foundations of Capital Markets

Author: David Schwartz J.D. CPA

A trust is a fiduciary arrangement that allows one party to transfer assets to a third party, or trustee, to hold assets on behalf of a single beneficiary or a number of beneficiaries. Trusts have myriad uses and are employed across a wide variety of property transfers, transactions, testamentary bequests, and business arrangements. They are so useful because they are so very flexible and can be custom tailored to restrict exactly how the assets are to be managed during the life of the trust, as well as how, when, and in what form the assets pass to the beneficiaries. Because trusts have such utility and so widely used, a large body of law has grown up around them. And since a key aspect of trusts is the placement of things of value in the care of a third party, the trustee, a corollary concept, fiduciary duty, has also grown to address the rights and responsibilities of trustees with respect to the property in their care, and with respect to the trust’s beneficiaries. Because of their importance to modern commerce and life events in general, over the course of three short posts, we will examine the history of trusts and the development of fiduciary duties, application of trust and fiduciary principles to investment funds, and we will explore some of the powers and duties of fund trustees. In this first post, we examine the historical development of trusts and the fiduciary concept.

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Wednesday, October 16, 2013

Collateral Analysis:

“Among the duties of the president is that of constantly reviewing the credits of the bank.”

Author: David Schwartz J.D. CPA
Board RoomNineteenth century commercial banks earned their profits to a large extent by financing the inventories of shopkeepers and their supply chains. The expansion of manufacturing during the Industrial Revolution resulted in lower prices, broader distribution channels and an explosion in mercantile trade. As the first department stores were developed in the early 1850s, merchants increasingly asked for greater lines of credit to support their growing businesses.
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