Institutional investors often actually like being able to invest in assets that aren't subject to public market fluctuations based on speculation, sentiment, de

Institutional investors often actually like being able to invest in assets that aren't subject to public market fluctuations based on speculation, sentiment, derivatives, proxy disputes, where any share transactions are strictly controlled and repurchase rights themselves are tightly bartered between various share classes. Ultimately, the kind of wash sale you're talking about only applies when sophisticated accredited investors pump the price and dump to unaccredited unsophisticated investors. Institutional investors must know better, or (to the benefit of other institutions), they don't remain fit enough to be an accredited institutional investor for very long. Regulators lie downstream from, and are often directly captured by this sort of jockeying for power between large institutional investors and their turf wars (SEC/CFTC -> private sector financial services/banking pipeline). So regulation isn't always an effective answer for these kinds of incentive problems.