Debate over rebates turns torrid
THE debate on commission rebates is heating up, with Fidelity Investments firing a broadside against the industry and Jardine Fleming for accepting the ''kickbacks''.
In a full-page advertisement in today's Business Post, Fidelity slams the commission rebates as unethical, saying they can lead to ''churning'', to put more money in the fund manager's pocket.
''When a fund manager receives additional money each time he trades, conflicts of interests arise,'' says the advertisement.
That sentiment is supported by a letter from Fidelity chief investment officer William Ebsworth, who describes Jardine's veiled threat of fund managers leaving Hong Kong as ''silly''. ''Where will they flee?'' he asks.
Fidelity also disagrees with Jardine Fleming chairman Alan Smith's belief that rebates would be pocketed by Japanese brokers if not kicked back to fund managers.