prudent man rule

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Prudent Man Rule

A legal rule requiring investment advisers to only make investments for their clients' discretionary accounts that a "prudent person" would make. This means that investment advisers operating discretionary accounts are not allowed to make investments they believe will lose money for the client. It does not require that the investment adviser always make correct decisions; it merely requires him/her to make decisions that will be generally accepted as sound for someone of average intelligence. The rule has its origins in an 1830 court decision in Massachusetts, stating that trustees must manage the affairs of others as if they were managing "their own affairs." See also: Suitability rules, Twisting.

prudent man rule

A federal and state regulation requiring trustees and portfolio managers to make financial decisions in the manner of a prudent man, that is, with intelligence and discretion. The prudent man rule requires care in the selection of investments but does not limit investment alternatives. See also investment-grade, legal list.

Prudent man rule.

The prudent man rule is the basic standard a fiduciary, who is responsible for other people's money, must meet.

It mandates acting as a thoughtful and careful person would, given a particular set of circumstances. A trustee, for example, observes the prudent man rule by preserving a trust's assets for its beneficiaries.

The prudent man rule has sometimes been described as a defensive approach to money management, putting greater emphasis on preservation than on growth. The newer prudent investor rule differs by putting greater emphasis on achieving a reasonable rate of return and by delegating decision-making to investment professionals.

References in periodicals archive ?
See Bungard, supra note 63, at 63 (arguing that a shift from the American Rule to the English Rule would result in a decrease in "the overall volume of litigation"); W.
McCoy partly blames Allen for IFI's failure to receive church approval and therefore the definite demise of Aglipay's congregation; other contributing factors also related to American rule, such as the decreasing nationalist power and a Supreme Court decision restoring IFI occupied churches to the Catholic hierarchy.
The implication under the American rule is that doctrines of consent would negate criminal liability provided that injury occurred within the rules and practices of the game, or playing culture, of the sport involved so long as the rules and practices themselves are reasonable.
in contravention of the American rule, the Rules are carefully drafted
When I went back to American rule, it felt to me that things were worse.
The Iraqi struggle for independence from American rule has begun in earnest.
Called Jade's Law, it aims to bring in an American rule which forbids drivers from overtaking school buses while they are dropping off children.
military presence has benefited the nation, saying, ''It is a historical fact that for the 27 years Okinawa had been under American rule, the economy of Japan had greatly prospered in peace.
1] During the early 1980s, Congress attempted to change the American Rule as it applied to small business or individual litigants who successfully brought cases against the government by enacting EAJA.
Under the American rule, the settlement is unbiased, but under the English rule the settlement favors the party that has a higher probability of obtaining favorable evidence, thus tilting the outcome away from a fair allocation.
These include the restriction of coverage to subcontractors or suppliers in privity of contract with the prime contractor or with a first tier subcontractor, the lack of remedy against the government if it fails to obtain Miller Act bonds and application of the American Rule barring the routine recovery of attorneys fees as part of a Miller Act claim.

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