The prudent man rule continues to be the prevailing statute in a small number of states, in particular with regards to investments permitted by mutually-chartered institutions such as savings banks and insurance companies.
The prudent man rule in its broader interpretations implies that the fiduciary should perform enough due diligence to ensure that the company meets the investment needs of the investors.
Typical due diligence includes discussions with management, vendors and customers, as well as proper evaluation of any risk factors that might affect the performance of the company or its securities.
The modern interpretation of the "prudent man rule" goes beyond the assessment of each asset individually to include the concept of due diligence and diversification.
The logic is this: an asset may be too risky to put all your money in (thus failing the prudent man rule) but may still be very diversifying and therefore beneficial in a small proportion of the total portfolio.