I'm looking for examples of endowment funds or charitable trusts being
sued for mismanaging the money under their control.  I'm not looking
for any lawsuits related to WorldCom or Enron.  Specifically, I'm
interested in whether any trust or endowment fund was sued not because
they lost money, but rather sued because the fund was invested too
conservatively and didn't make a higer rate of return.

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Request for Question Clarification by pafalafa-ga on 19 Nov 2005 08:38 PST

hoile-ga,

I'm pretty good at tracking down existing case law, lawsuits, and the like.  

But I think the odds are pretty slim of actually finding a case based
on your criteria -- a trust sued for investing too conservatively.  I
don't want to put in a large effort on this, if I'm likely to come up
empty-handed.

On the other hand, there are likely to be suits against trusts and
endownments regarding reckless investing.  If these are of interest,
let me know, and I'll see if I can provide them as an answer to your
question -- and I'd certainly look for suits that match your criteria,
but again, I don't think it likely I could find any.

So...let me know how, or if, you'd like me to proceed on this.  And
also, is there a particular state that is of interest to you,
regarding legal precedents in this matter?

Looking forward to hearing from you,

pafalafa-ga

It would be very difficult  - if not impossible -  to make a case for
such a suit since investment managers of such funds have a primary
obligation of protecting the principal, a strong defence against
accusations that they did not invest to maximize income.  Furthermore,
as we all know, with hindsight it is easy to identify investments that
would have been "a sure thing", but it is a different matter to pin
someone down for not having made the investment when it first became
available.

The subject is expressed in the "Prudent Man Rule"  

http://www.investorwords.com/3927/Prudent_Man_Rule.html 

and legislated in the UNIFORM PRUDENT INVESTOR ACT:

http://www.law.upenn.edu/bll/ulc/fnact99/1990s/upia94.htm

I hope this is a help, Myoarin