prudent man rule

prudent man rule
prudent man rule n: a rule giving discretion to a fiduciary and esp. a trustee to manage another's affairs and invest another's money with such skill and care as a person of ordinary prudence and intelligence would use in managing his or her own affairs or investments – called also prudent person rule; compare legal list

Merriam-Webster’s Dictionary of Law. . 1996.

prudent man rule
n.
A rule guiding investment by trustees in some states, limiting a trustee’s investments to securities that a prudent person of reasonable intelligence and discretion would choose to provide a decent income and preserve capital.

The Essential Law Dictionary. — Sphinx Publishing, An imprint of Sourcebooks, Inc. . 2008.

prudent man rule
n.
   the requirement that a trustee, investment manager of pension funds, treasurer of a city or county, or any fiduciary (a trusted agent) must only invest funds entrusted to him/her as would a person of prudence, i.e. with discretion, care and intelligence. Thus solid "blue chip" securities, secured loans, federally guaranteed mortgages, treasury certificates and other conservative investments providing a reasonable return are within the prudent man rule. Some states have statutes which list the types of investments allowable under the rule. Unfortunately, the rule is subjective, and some financial managers have put funds into speculative investments to achieve higher rates of return, which has resulted in bankruptcy and disaster, as in the case of Orange County, California (1994).
   See also: fiduciary, trustee

Law dictionary. . 2013.

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Look at other dictionaries:

  • Prudent man rule — The Prudent Man Rule is based on common law stemming from the 1830 Massachusetts court decision Harvard College v. Armory, 9 Pick. (26 Mass.) 446, 461 (1830). The Prudent Man Rule directs trustees to observe how men of prudence, discretion and… …   Wikipedia

  • Prudent Man Rule — An investment standard. In some states, the law requires that a fiduciary, such as a trustee for pension funds, may invest the trust s or fund s money only in a list of securities designated by the state the so called legal list. In other states …   Black's law dictionary

  • prudent-man rule — A US criterion for managing investments, especially in relation to pensions, that is designed to avoid reckless speculation. It requires that a fiduciary behave as a notional prudent man or woman would when making an investment …   Big dictionary of business and management

  • prudent-man rule —  U.S. legal standard for the actions of someone charged with investing funds in trust for others. The administrator of the funds is expected to ask, “Would a prudent man or woman make this investment?” …   American business jargon

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  • Prudent-Person Rule — A legal maxim restricting the discretion in a client s account to investments that a prudent person seeking reasonable income and preservation of capital might buy for his or her own portfolio. Also called the prudent man rule . This rule is… …   Investment dictionary

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  • prudent man — See the ordinary prudent man. prudent man rule. The rule that one taking a negotiable instrument from the payee or prior endorsee is put upon inquiry as to infirmity or defect in the instrument by circumstances calculated to arouse the suspicions …   Ballentine's law dictionary

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