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DOCUBIRT 3ESURE
C7355 - [C2978065]
Are Pension Beneficiaries Harmed by Large Bank Trust Department
Sales of Large Common Stock Positions? The Evidence. PAD-78-75;
B-192918. October 19, 1978. 3 pp. * 3 appendices (37 pp.).
Report to Sen. Lloyd Bentsen, Chairman, Senate Committee on
Finance: Private Pension Plans and Employee Fringe Benefits
Subcommittee; by Elmer B. Staats, Comptroller General.
Contact: Program Analysis Div.
Budget Function: Interest (910).
OrganizatIion Concerned: Departren'- of Labor; Securities and
Nichinqe Conission.
Congress cnal Relevance: Senate Committee 4:' Finar-ie: Private
Pension Plans and Employee Fringe Benafits Subcommittee;
Senate Committee on Finance. Sen. Lloyd Bentsen.
A stody was conducted to provide a comparative analysis
of the time taken to sell out large common t ick position3 by
large and small bank trust departments. It was suggested that,
because large institutions hold large positions in certain
securities, when they eliminate one of these positions, selling
should be spread over longer periods ti avoid or ::educe
destab.liLing impacts on that stock's price. It vws also
suggested that if an institution takes a long time to sell a
single stock, long selling periods might adversely affect
investment performance and thus injure that institution1s
beneficiaries. Position eliminations by the 20 largest reporting
bank trust departments and by 20 smaller bank trust departments
were examined. Findings/Conclusions: The positions ultimately
sold out by large batk trust departments representqd a maximum
of 1.3% of the as2;ets beig managed for pension benefici&ries,
with a comparable figure of 0.4% for the smaller banks. A weak
statistical relationship (representing the selling behavior of a
single bank) was fcund between the size of positions eliminated
and the time taken to eiminuate then. The length of time taken
to sel3 off large positions had little, if anything, to do with
the size of the position during this period. In general, prices
were higher during the selling periods than at the beginning of
the selling periods. There was no evidence that prices declined
on large positions that were sold over long periods of time and
no basis was found for concern about the potential adverse
impacts on pension beneficiaries. (SC)](ViewImageLocal?handle=hein.gao/gaobaaybr0001&div=1&collection=&method=preview&ext=.png&size=3)