Conflict of interest in the securities market

Abstract

In the article examines the problem of applying the legal interpretation of the concept of “conflict of interest,” including as applicable to legal relations in the stock market. Such concepts as the fiduciary duties of a trustee, the controversial nature of the legal definition of a conflict of interest through the concept of personal interest are considered. The need for further development of the prudential regulation system and a more specific definition of the criteria for the fiduciary duties of the principal in the securities market are substantiated. The possibility of introducing into Russian practice the approach used in the common law system is analyzed. According to this approach, only proof of the fact of dishonest fulfillment of fiduciary duties, such as loyalty, due diligence and information duty can serve as a basis for prosecution in the event of a conflict of interest, but not the establishment of the fact of personal interest. In particular, from this point of view, the fundamental rule of the common law system applied in the stock market is considered — to fully rely on the information (i.e., a situation completely opposite to the approach that has developed in Russian law in relation to identifying conflicts of interest) provided by the broker to the client, and to expect, that he will perform his duties with all competence and due care. The author substantiates the greater effectiveness of the approach of establishing a presumption of conscientious fulfillment of fiduciary duties by a trustee and bringing to responsibility only if the contrary fact is proven.