Victims of a Ponzi scheme sued the bank used by the fraudster, alleging negligence and knowing assistance in breach of trust for failing to shut down the fraudster's accounts.
The court held that the plaintiffs did not prove their investments were held under an express trust, and the evidence did not establish that the bank had actual knowledge of the fraud or its moral equivalents of wilful blindness or recklessness.
Applying Livent and prior banking-fraud authorities, the court further declined to recognize a novel duty of care owed by a bank to third-party victims based only on constructive knowledge of a customer's fraud.
The action was dismissed in full.
