Responsibility

In this case, Hamlin has a fiduciary responsibility to Atlanta Park.

First, it is obvious that Hamlin and Atlanta Park are trustee and client respectively in this case. Meanwhile, Hamlin failed to fulfill the primary objective written in the agreement.

In September of 1991, Atlanta Park signed a discretionary account agreement, a contract giving Hamlin complete discretion to invest the money as it saw fit, which means that there was a fiduciary contract that regulars Hamlin and Atlanta Park actions and behaviors.

A discretionary account gives a broker the right to make significant investment decisions without permission from or even consultation with the account's owner. However, decisions made on a discretionary account must be made in accordance with the client's stated investment goals and according to the prudent man principle.[1]

In the agreement, Atlanta Park emphasized that “the primary for investment of endowment funds should be preservation of capital, a secondary objective is sufficient capital appreciation to maintain a growing fund in real terms. Consistent with prudent standards’ for preservation of capital and maintenance of liquidity, the goal of the Atlanta Park Medical Center is to earn the highest possible total rate of return within the hospital’s tolerance for risk.“ Nevertheless, Hamlin didn’t meet its client’s satisfaction. By October of 1994, Atlanta Park had suffered loses exceeding $2.65 million from the HDSH fund alone.

When trustee manages a portfolio to a specific mandate, they must only investment recommendations or take only investment actions that are consistent with the stated objectives and constraints of the portfolio. [2]

In addition, Hamlin, as a trustee, violates the duty of loyalty to its client Atlanta Park. The duty consists of placing clients’ interest first and disclosing conflicts.

1 To place clients’ interest first

The duty to place clients’ interest first is undivided loyalty, which means that a...