Beverly Chandler, Opalesque London: In a Client Briefing, law firm Clifford Chance reports that the Court of Rotterdam recently nullified a binding instruction given by the Dutch Central Bank relating to the application of the prudent person rule. DNB had instructed a pension fund to reduce its investments in gold from 13% to 3% of its total investments. The Court also ruled that it will investigate whether DNB is liable for losses incurred by the pension fund, said to be estimated at approximately €10 million ($13m).
Clifford Chance explains that the prudent person rule under the Dutch Pension Act governs the
investment policies of Dutch
pension funds. The firm says: "It is an open
standard which in short implies,
among other things, that pension
assets: (i) must be invested in the
best interests of participants and
beneficiaries and in such a manner
as to ensure the security, quality,
liquidity and profitability of the
portfolio as a whole; and (ii) must
be properly diversified".
However, there is limited Dutch
case law to assist with the
interpretation of this open standard. "Apart from the "gold case", there is
only one other case regarding a DNB
binding instruction relating to the
prudent person rule.
That case however, which was upheld
in Court, gives limited guidance for
interpretation of the prudent person
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