Prudent Man Rule

Definition

The fundamental principle for professional money management, stated by Judge Samuel Putnum in 1830: "Those with responsibility to invest money for others should act with prudence, discretion, intelligence, and regard for the safety of capital as well as income." Some states which don't have specific legal lists require fiduciaries to uphold the Prudent Investor Act. also called Prudent Investor Act (Rule).

Use Prudent Man Rule in a sentence

Stockbrokers are the ones targeted by the phrase prudent man rule as they usually invest money for other people that want the stocks for themselves.

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My hedge fund manager was sued for improper management of funds but was able to defend the lawsuit by showing his adherence to the prudent man rule.

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Bill the investment banker needed to be mindful of the prudent man rule since it applied to his profession and he was handling the money of others.

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Prudent Investor Act Prudent Expert Act