This Comment analyzes the 1997 financial crisis in Asia and its effect on U.S. mutual fund investors. The crisis was most acute in, and this Comment focuses on, the countries of Thailand, Indonesia and South Korea. The lack of transparency in these countries led to substantial losses for U.S. investors whose money was in nontransparent organizations through their ownership of mutual funds. The International Monetary Fund responded to the Asian crisis with aid packages intended to prevent the insolvency of those countries in financial trouble. As part of the IMF's program, one of the primary requirements for receiving aid is for each country to improve the level of financial transparency required of its business and financial sectors. U.S. mutual fund investors could be better protected against unnecessary losses, and the success of the IMF program greatly enhanced, by either increasing the level of disclosure required of the underlying securities held in a mutual fund's portfolio, or by prohibiting investment by mutual funds in companies who lack adequate financial transparency.
Taking Another Look at the Regulation of Mutual Funds in the Aftermath of the Asian Financial Crisis,
7 Pac. Rim L & Pol'y J.
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