Posted in Finance, Accounting and Economics Terms, Total Reads: 348
Definition: Authorized Investment
An investment made as per client's wish or as in the agreement of the trust instrument. The restriction is imposed on the amount and the kind of investment made by a trustee or a fiduciary. The legal investment is as dictated by law or by state banking authority.
This is the amount and type of investment allowed by the government. But the trustee can only invest in authorized investments as per that trust instrument. All other investments are considered to be illegal for that particular trust. This ensures that the trust is managed conservatively and aggressive investments are not made.
The legal-list is by far abolished by many states but there are rules under Financial Industry Regulator Authority (FINRA), U.S Securities and Exchange Board (SEC) which governs the investment made by the fiduciary or the trustee of a trust.