In 2013, the Washington State Appeals Court upheld a lower court ruling finding that one of the state’s largest trade organizations, the Building Industry Association of Washington (BIAW), violated their fiduciary duty by retaining interest earned on deposited funds, commingling funds, and failing to provide statutorily required accountings. The judgement required the BIAW to disgorge approximately $20 million in fees along with $400,000 in interest wrongfully retained to fund political campaigns.
It’s the sort of high-profile case that garnered significant media attention because the association’s seasoned finance and investment professionals were clearly aware of the unethical actions taking place. Far more frequently, however, the breaches of fiduciary duty that occur among association investment committees are born out of inexperience rather than ill intent.
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