Blind trust

Blind trust is a trust in which assets or securities are held under the management of an independent party such as a commercial bank or a financial firm. The purpose of a blind trust is to separate the owners of the asset from the management duties attached to it. A blind trust is useful in preventing a conflict of interest between the owner of the asset and individuals that may be affected by it. A company's board of directors may ask an officer of a company to place his securities on a blind trust which may contain stocks of a competing company. This way, the performance of the officer will not be tied directly to the performance of a competing company's security that may be owned.