fiduciary duty

(noun)

A legal or ethical relationship of confidence or trust between two or more parties. Typically, a fiduciary prudently takes care of money for another person.

Related Terms

Examples of fiduciary duty in the following topics:

  • Banking Crises and Centralized Reserve Enforcements

    • One of the Federal Reserve's duties is to regulate financial institutions, such as bank-holding companies and state member banks.
    • Generally, the Federal Reserve takes formal enforcement actions against the above entities for violations of laws, rules, or regulations, unsafe or unsound practices, breaches of fiduciary duty, and violations of final orders.

  • Employee Retirement Income Security Act

    • Sets minimum standards for participation, vesting, benefit accrual, and funding. provides fiduciary responsibilities for those who manage and control plan assets.
    • Gives participants the right to sue for benefits and breaches of fiduciary duty

  • Nonprofit Organizations (NPOs)

    • Both not-for-profit and for-profit corporate entities must have board members, steering committee members, or trustees who owe the organization a fiduciary duty of loyalty and trust.

  • Profit and Stakeholders

    • In the traditional view of the firm, the stockholders are the owners of the company, and the firm has a binding fiduciary duty to put their needs first and to increase value.

  • Conflicts of Interest

    • An example of using a third-party to establish an 'arm's length' or fair transaction would be where a corporation that leases an office building that is owned by the CEO might get an independent evaluation showing what the market rate is for such leases in the locale, to address the conflict of interest that exists between the fiduciary duty of the CEO (to the stockholders, by getting the lowest rent possible) and the personal interest of that CEO (to maximize the income that the CEO gets from owning that office building by getting the highest rent possible).
    • A director or executive of a corporation will be subject to legal liability if a conflict of interest breaches his/her Duty of Loyalty.
    • Such competing interests can make it difficult to fulfill his or her duties impartially.
    • A conflict of interest could impair an individual's ability to perform his or her duties and responsibilities objectively. "

  • Ethical Issues Within a Business

    • Broadly speaking, ethical issues in business include the rights and duties between a company and its stakeholders.
    • Broadly speaking, ethical issues in business include the rights and duties between a company and its employees, suppliers, customers, and neighbors, and its fiduciary responsibility to its shareholders.

  • Corporate Social Responsibility

    • The law says corporations have a fiduciary responsibility (fiduciary = the highest standard of loyalty and trust owed by agents to principles) to their shareholders, who are the legal owners of the corporation.

  • Landrum-Griffin Act

    • Declare that every union officer must act as a fiduciary in handling the assets and conducting the affairs of the union.

  • Personal ethics: four ethical approaches

    • Immanuel Kant is the quintessential deontological (duty based) ethical theorist.
    • Deontological simply means the study (or science) of duty.
    • It is one thing to understand that there are duties which do not depend on consequences; it is quite another to develop the character to act on those duties.
    • The duties we owe a colleague in the workplace is different from the duties we owe a spouse; those duties are different from the duties we owe our country.
    • If Ross is correct that duties come from relationships, paying attention to such questions about the company we keep may be more than a social obligation; perhaps, our ethical duty.

  • Liabilities

    • A duty or responsibility to others that entails settlement by future transfer or use of assets, provision of services, or other transaction yielding an economic benefit, at a specified or determinable date, on occurrence of a specified event, or on demand
    • A duty or responsibility that obligates the entity to another, leaving it little or no discretion to avoid settlement
    • An equitable obligation is a duty based on ethical or moral considerations.