How BlackRock, Vanguard, and State Street’s shared auditors entrench systemic market concentration and erode competitive accountability
Original framing: “The 'Big Three' asset managers use auditor-sharing for portfolio management” — Phys.org
The rise of institutional investors traces back to the 1970s deregulation, particularly the 1974 ERISA Act, which incentivized pension funds to consolidate capital. By the 1990s, the 'Big Three' emerged as dominant players, facilitated by the shift from defined-benefit to defined-contribution retirement plans. Historical parallels include the Gilded Age’s trust monopolies, which were later broken up by antitrust laws—laws now weakened by financialization. The auditor-sharing model echoes 19th-century railroad barons’ use of interlocking directorates to control markets.
The 'Big Three' asset managers—BlackRock, Vanguard, and State Street—operate as a financial oligopoly, enabled by auditor-sharing and deregulatory loopholes that suppress competition and concentrate power.
This model, rooted in 1970s financialization, mirrors historical trusts like the railroad barons, yet today’s regulators lack the will to dismantle it. Marginalized communities, particularly in the Global South and communities of color, bear the brunt of suppressed wages and capital flight, while Indigenous and cooperative economic models offer radical alternatives. The auditor-sharing nexus, a modern-day conflict of interest, exemplifies the absurdity of financial governance, where auditors certify their own masters. Breaking this cycle requires antitrust enforcement, public pension reform, and global transparency standards—measures that would redistribute power from financial elites to workers and communities, aligning economic governance with democratic values.