Are Pension Beneficiaries Harmed by Large Bank Trust Department Sales of Large Common Stock Positions? The Evidence

A study was conducted to provide a comparative analysis of the time taken to sell out large common stock positions 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 to avoid or reduce destabilizing impacts on that stock's price. It was 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 institution's beneficiaries. Position eliminations by the 20 largest reporting bank trust departments and by 20 smaller bank trust departments were examined.