Search Investopedia

Fiduciary Abuse

Filed Under » ,
Dictionary Says

Definition of 'Fiduciary Abuse'

Describes a situation in which an individual who is legally appointed to manage another party's assets uses his or her power to benefit financially in an unethical or illegal fashion.
Investopedia Says

Investopedia explains 'Fiduciary Abuse'

Fiduciary abuse can be practiced by agents such as a financial advisor, or power of attorneys. Examples include a  financial advisor borrowing funds from client's account in order to take speculative positions in securities, or even a close family member (acting as power of attorney) misrepresenting a legally incapacitated family member as a way to steal assets.

People can protect themselves from fiduciary abuse by taking an active role in their money management or by setting up an irrevocable trust.

Related Definitions

  •

    Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets for the benefit of the other person rather than for his or her ...
    Read More »

  • Beneficiary

    A person or entity named in a will or a financial contract as the inheritor of property when the property owner dies.
    Read More »

  • Blind Trust

    A trust in which the executors have full discretion over the assets, and the trust beneficiaries have no knowledge of the holdings of the trust.
    Read More »

    • Fiduciary Fraud

      Illegal practices committed by financial institutions and financial professionals that constitute a breach of trust between the financial agent and the client. Fiduciaries are legally ...
      Read More »

    • Irrevocable Trust

      A trust that can't be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets into the trust, effectively removes all of his or her ...
      Read More »

    • Go Shop Period

      A provision that allows a public company that is being sold to seek out competing offers even after it has already received a firm purchase offer. The original offer then functions as a ...
      Read More »

    • Power Of Attorney

      A legal document giving one person (called an "agent" or "attorney-in-fact") the power to act for another person (the principal). The agent can have broad legal authority or limited ...
      Read More »

    • Misappropriation Theory

      A perspective that defines the act of stealing confidential information from an employer and then trading securities based on the misappropriated insider knowledge. In the United States, ...
      Read More »

    • Fiduciary Certification

      The certification process to ensure that fiduciaries uphold the prudent investment guidelines and practices set forth by state regulations. A certified fiduciary needs to fulfill all ...
      Read More »

    • Career-Ending Move

      A huge mistake or bad decision made by an employee that has big consequences. A career-ending move is a mistake so egregious that it would likely result in the loss of the employee's job ...
      Read More »

Articles Of Interest

Sponsored links
Hot Definitions
Partner Links
Suggested Definitions