See: Fiduciary. See: Prudent Person Rule.
Being prudent just means being respectful, careful, measured...you get it.
In this case, we're talking about people who act as trustees for estates. In other words, if you happen to find yourself the trustee for a huuuuge portfolio, and it's your job to invest/manage that money on behalf of a beneficiary (that's a big sticking point, by the way; it's the only reason trusts are made in the first place), this rule says that you cannot invest the money into your own imaginary company you just filed on Legalzoom.com, nor can you invest it in dodo bird futures. Because...they've been dead for years, and there is no such thing as dodo bird futures.
So yes, this act says, "If you are a trustee, and you act in a willfully stupid manner, you can get in big trouble."
The end.
Related or Semi-related Video
Finance: What does it mean to have fiduc...51 Views
Finance a la Shmoop! What does it mean to have fiduciary obligation? Alright well
fiduciary refers to the responsible person, who has oversight, above a given
financial transaction, or process. That is, it is the fiduciary obligation, of the
head of a corporation's Audit Committee, to be certain that the
accounting process is handled fairly, objectively, inclusively and thoroughly [boss overseeing worker]
and there are a few other ly's in there, but well you get the gist. Doesn't it
seem strange, that some companies just seem to get into the same kind of
trouble again and again. Remember the BP oil spill, well it wasn't the first time
they'd had, an accident. You know, if you can call that spill only an accident.
What kind of oversight did they have? Any? Well some companies just have a [man carrying oil barrel
corporate culture that's run by the notion, that well, whatever isn't caught
as a crime, is legal. Lots of Wall Street stock brokerages came and went this
way. Yah, remember the Wolf of Wall Street? Kind of like that. Well what is
the obligation of a responsible party when faced with ethical dilemmas? Where
does the obligation start and stop? Should fiduciaries be held to a higher
personal standard than normal people? Yah, kind of the, you know, Harvey
Weinstein effect there. Yes, No, maybe, alright. Right, all three times. [question ABCD chart]
It's definitely yes, no, or maybe.
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