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Matter of Janes - Case Brief Summary (New York)

In Matter of Janes, 90 NY2d 41, 50, 681 N.E.2d 332, 659 N.Y.S.2d 165, rearg denied 90 NY2d 885, 684 N.E.2d 277, 661 N.Y.S.2d 827 [1997], the Court of Appeals found the Bank liable, as an executor, for its imprudent retention of a high concentration of Kodak stock from July 1973 through February 1980.

More specifically, the Court of Appeals found that the Bank violated certain "critical obligations of a fiduciary in making investment decisions under the prudent person rule," to wit:

(1) its failure to consider the investment in Kodak stock in relation to the entire portfolio of the estate, i.e., whether the Kodak concentration itself created or added to the investment risk;

(2) its failure to pay sufficient attention to the needs and interests of the testator's widow and life beneficiary of the testamentary trust;

(3) its failure, in managing the estate's investments, to exercise due care and the skill it held itself out as possessing as a corporate fiduciary.

As to the last obligation, the Court found proof in the record that the Bank had failed to:

(1) initially undertake a formal analysis of the estate and establish an investment plan;

(2) follow its own internal trustee review protocol during its administration of the estate, which advised special caution and attention in cases of portfolio concentration of as little as 20%;

(3) conduct more than routine reviews of its holding of Kodak in the estate, without considering alternative investment choices, over a period of steady decline in the value of the stock.

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