Abstract
The discharged duty of the fiduciary may be considered the overarching exhortation that demands good governance. The concept of fiduciary duty finds its sources in Roman law. The word “fiduciary” comes from the Latin fiducia, which refers to the transfer of a right to a person, who receives it, subject to an obligation to transfer it again at a future time or upon the fulfillment of a certain condition. This evokes the modern-day idea of a trust or of an asset held in escrow. Fiduciary duty represents a “cluster of obligations” owed by one person, the “trustee” or “fiduciary” toward another, the “cestui” or “beneficiary”, regarding an identified subject matter, which is referred to as the “res” or “subject of the trust”.
We have come a long way from the days of the legal interpretation of the Prudent Man Rule. The development of modern portfolio theory pushed the legal definition further. Codified in Employee Retirement Income Security Act (ERISA) for corporate pensions, and in the Uniform Prudent Management of Institutional Funds Act for endowments and foundations, institutional investors now have full latitude over their investments.
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Notes
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Chodos, 2000.
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Pickering, Octavius (1831). Harvard College and Massachusetts General v. Francis Amory. Reports of Cases Argued and Determined in the Supreme Judicial Court of Massachusetts, Vol. IX. Boston: Hilliard, Gray, Little ad Wilkins. pp. 446–465.
- 4.
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards pension plans to protect the beneficiaries of those plans.
- 5.
SEC v. David W. Noack and Stiefel Nicholas & Co., Inc., filed 10/05/12 https://www.sec.gov/divisions/enforce/claims/docs/stifel-complaint.pdf
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Rumage, Jeff, “Whitefish Bay schools recoup failed $1.2M investment”, Milwaukee Journal-Sentinel, December 15, 2016 https://www.jsonline.com/story/news/local/whitefish-bay/2016/12/15/whitefish-bay-schools-recoup-failed-12m-investment/95347966/
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Payne, William T. and Spangler, Patrick W., “Public Employee Pension Litigation: Legal Landscape”, 012 ABA Mid-Winter Meeting – Breakout Session, p.1.
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Ibid., p. 7.
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Paisley, Kathleen, “Public Pension Funds: The Need for Federal Regulation of Trustee Investment Decisions”, Yale Law and Policy Review, Vol. 4, Issue 1, Article 10, 1985.
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Ibid., pp. 193–194.
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Kutcher, Robert A., “Breach of Fiduciary Duties”, Business Torts Litigation, Second Edition, American Bar Association, 2005, p. 11, David A. Soley, Robert Y. Gwin, and Ann E. Georgehead, editors.
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Chason, Eric D., “Redressing All ERISA Fiduciary Breaches Under Section 409 (a)”, William & Mary Law School Scholarship Repository, College of William and Mary Law School, 2010, p. 148.
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Merker, C.K., Peck, S.W. (2019). Fiduciary Duty. In: The Trustee Governance Guide. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-21088-5_3
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DOI: https://doi.org/10.1007/978-3-030-21088-5_3
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