Nonlegal Investment

A security of sub-investment quality made by a legal representative that does not conform to requirements of defined statutes. Nonlegal investments are typically securities that are not in compliance with statutory regulations for trust investments. They are not the same as unauthorized investments.

Mandatory legal-list states provide a set list of investments in which a fiduciary must invest; permissive legal-list states provide a list of investments in which a fiduciary may invest. If the fiduciary invests in property or securities not on the list, it becomes their duty to provide the proprietary of the investment.

Some states will permit their trusts to hold nonlegal securities if they were previously legal investments whose status was altered by a change in law or if conditions have arisen since their purchase that would make the purchase not legal at the current time.


Investment dictionary. . 2012.

Look at other dictionaries:

  • nonlegal investment — An investment by a trustee which does not qualify as a legal investment. See legal investment …   Ballentine's law dictionary

  • 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.… …   Investment dictionary

  • USURY — Biblical Law SOURCES If thou lend money to any of My people, even to the poor with thee, thou shalt not be to him as a creditor (nosheh), neither shall ye lay upon him interest (Ex. 22:24). And if thy brother be waxen poor and his means fail with …   Encyclopedia of Judaism

  • silent partner —    A nonlegal term for an investor in a business who takes no part in its management and is often unknown to customers or competitors. If the business is a limited partnership, each limited partner is prohibited from taking part in management and …   Business law dictionary

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