Modern Investment Management and the Prudent Man Rule
ISBN: , SKU: , AUTHOR: Longstreth, Bevis / Harding, John Mason / Steiner, Daniel, PUBLISHER: Oxford University Press, In recent years <strong>thestrong> field <strong>ofstrong> finance has exploded with innovation. New products, services and techniques abound. <strong>Thestrong> risks <strong>ofstrong> inflation, <strong>thestrong> volatility <strong>ofstrong> interest rates, <strong>thestrong> deregulation <strong>ofstrong> financial intermediaries and <strong>thestrong> unbundling <strong>ofstrong> financial services have combined to present investment managers with challenges and opportunities far greater than in <strong>thestrong> past. For trustees and managers <strong>ofstrong> pension, trust, endowment, and similar funds, <strong>thestrong> task <strong>ofstrong> meeting <strong>thestrong> challenges and exploiting <strong>thestrong> opportunities is much more difficult. <strong>Thestrong>se fiduciaries must measure <strong>thestrong>ir investment decisions against constrained interpretations <strong>ofstrong> a legal standard--<strong>thestrong> prudent man <strong>rulestrong>--that have caused it to lag far behind changes in investment <strong>thestrong>ory and <strong>thestrong> marketplace. Drawing on financial history, a major opinion survey <strong>ofstrong> institutional investors, and comprehensive reviews <strong>ofstrong> <strong>thestrong> law and <strong>ofstrong> <strong>thestrong> lessons <strong>ofstrong> modern portfolio <strong>thestrong>ory for prudence, this book presents a powerful case that <strong>thestrong> prudent man <strong>rulestrong> as elaborated in legal treatises and much <strong>ofstrong> <strong>thestrong> case law would virtually compel a fiduciary to act imprudently in terms <strong>ofstrong> financial <strong>thestrong>ory and marketplace reality. In proposing a modern paradigm <strong>ofstrong> investment prudence, <strong>thestrong> book uses illustrations drawn from such traditionally suspect categories <strong>ofstrong> investment fiduciaries as securities lending, real estate, venture capital, options and futures and repurchaser agreements. An unusual examination <strong>ofstrong> <strong>thestrong> interaction <strong>ofstrong> <strong>thestrong> worlds <strong>ofstrong> law and finance, this work will be <strong>ofstrong> interest to fiduciaries who are subject to some from <strong>ofstrong> prudent man <strong>rulestrong> and all o<strong>thestrong>rs, including judges, lawyers and investment managers, who are called upon to interpret and apply that legalstandard.