PRINCO Motion

What was Princeton’s PRINCO motion? How did the court rule?


What was Princeton’s PRINCO motion? How did the court rule?

The Robertson Foundation’s Certificate of Incorporation enables the Foundation to invest in securities and property and, in furtherance of such powers, to retain investment managers. In their complaint, Mrs. Robertson’s descendants have argued that the Foundation board breached its fiduciary duties to the Foundation by selecting PRINCO as an investment manager. [See: What are plaintiffs seeking in this litigation?; Why did the Robertson trustees vote against the PRINCO appointment?] In its PRINCO motion for summary judgment, the University asked the court to find as matter of law that the decision by the Foundation board to retain PRINCO as an additional layer of investment management under the supervision of the Foundation’s investment committee was a valid exercise of the Foundation’s business judgment. [See: Why did the Robertson Foundation vote to engage PRINCO as its portfolio manager for the Foundation?; What has happened to the Foundation’s assets since engaging PRINCO?]

In the court’s PRINCO decision, Judge Shuster rejected as having “no basis” plaintiffs’ assertion that defendants had a disqualifying conflict of interest that prevented application of the “business judgment rule” which provides for judicial deference to trustee decision making. Instead, he concluded that the court should and would defer to the business judgment of the University-designated trustees “unless Plaintiffs can show that Defendants violated their duties of care, loyalty, and good faith.” In this connection, Judge Shuster concluded his opinion by noting: “While it may well be that Defendants [Princeton] will ultimately succeed on the merits of the issue, the factual setting presented precludes summary judgment.”

At trial, Princeton will present testimony proving that the decision to retain PRINCO was a result of sound financial judgment. Moreover, the trial will demonstrate that the Robertson Foundation has flourished under PRINCO. As Princeton noted in its motion papers, PRINCO offered the Foundation access to more diverse investment opportunities and a professional level of managerial expertise that would not otherwise have been available at a comparable cost. The Foundation’s corpus, valued at $561 million when the Foundation retained PRINCO in 2004, is now worth over $900 million—even after providing $20 million to $32 million annually to support the Woodrow Wilson School graduate program during the same period.