What Is A Blind Agreement

One of the most common situations justifying blind trust is when a person is elected to a public service. Politicians with international involvement may be tempted to use their position of influence to reduce taxes or tariffs, to ease barriers to trade, or to otherwise influence regulations that would benefit their foreign interests. They may be tempted to give lucrative government orders to companies in which they have personally invested, or to impose laws that benefit businesses, industries or sectors that account for a significant portion of their investments. Another common use for blind trusts is executives or members of the company`s board of directors. Individuals with large corporate portfolios and access to inside information are subject to securities trading restrictions that can complicate the prudent management of their portfolios. These rules can be avoided if the executive`s holdings are transferred to a blind trust where the executive cannot dictate when to buy or sell corporate shares. If you install a blind trust position, you are likely to need an expert guide to ensure that the correct procedure is followed. With the help of a professional, you can also ensure that all of your fiduciary value management requirements are clearly and precisely defined in the final agreement. It is not uncommon for someone to be elected to a political office after a success in the private sector.

But red flags are waved when the current investments or business interests of a newly elected official benefit from political decisions made through this function (either directly or by appointed officials). This is called a conflict of interest that creates a perception of inadequacy, regardless of actual intentions. One way to minimize these concerns is to create a “blind trust” in which the elected public servant transfers control of his or her assets to an agent. There are a variety of types of investment that a person can choose to contribute to blind trust. These include cash, real estate and private companies. Once the trust agreement is concluded, the agent must convert these assets into new forms to ensure that the agent is not aware of how it is invested. For example, a business manager compensated for company shares could create a blind trust to manage those shares.