DEFINITION of 'Unauthorized Investment'

Any investment that has not been specifically authorized by a legal trust. Unauthorized investments can technically meet statutory requirements for banks and trusts. However, they may still fail to meet the criteria of the grantor or trustee.

BREAKING DOWN 'Unauthorized Investment'

Unauthorized investments stand in contrast to "nonlegal" investments. These are inherently substandard investments that fail to meet basic statutory requirements of banks and trust departments. Unauthorized investments may merely fail to meet a stated investment objective.

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