SunTrust's Woes: It's the Real ThingSunTrust's Woes: It's the Real Thing
Kodak. IBM. Coca-Cola. The names are corporate icons. And these blue-chip stocks, if held in the portfolio of any trust, once meant a life of quiet contentment for both trustees and beneficiaries. No more. There's been a rise in lawsuits by beneficiaries claiming that trustees failed to diversify portfolios by holding onto vintage stocks such as Kodak, even as values plummeted. Diversification of
March 1, 2006
Karen Donovan, freelance journalist, Boston
Kodak. IBM. Coca-Cola.
The names are corporate icons. And these blue-chip stocks, if held in the portfolio of any trust, once meant a life of quiet contentment for both trustees and beneficiaries.
No more.
There's been a rise in lawsuits by beneficiaries claiming that trustees failed to diversify portfolios by holding onto vintage stocks such as Kodak, even as values plummeted. Diversification of risk is the mantra of modern-day investment and the law of “prudence” governing trustees has evolved to incorporate that knowledge.
A trustee who holds onto fading blue-chip stocks for too long will run afoul of the prudent investor rule. And a case pending in federal court in Atlanta puts this obligation i...
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