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Ludwig & Robinson issues a regular newsletter to clients on related legal developments, entitled the Litigation and Regulatory Report.  Please contact us for further information concerning the newsletter or issues of related interest.

http://www.ludwigrobinson.com/news-a-publications/developments
Jan. 2021  Banking & Insurance Review
  • 11th Circuit in investment wire fraud case affirms use of deposit agreement on motion to dismiss while recognizing potential duties to non-customers
  • California court in email wire fraud case permits amended complaint for negligent account opening against beneficiary’s bank
  • Virginia court in email ACH funds transfer fraud case relies on NACHA rules in permitting claims against bank
  • Nevada bench trial applies UCC in allocating loss between hacked seller and duped buyer
  • California court dismisses business email compromise/wire transfer fraud coverage case
  • FTC settles allegations mortgage analytics company failed to oversee vendor’s data security practices
Nov. 2020   Banking & Insurance Review
  • L&R obtains prompt full recovery for Polish client in ACH cybercrime case
  • 11th Circuit holds investors, not receiver, have third-party standing in Ponzi schemes
  • 11th Circuit decisions affirm dismissal of claims against beneficiary’s bank under UCC § 4A-207(b)
  • Common law exposure of the beneficiary’s bank continues in fraudulent funds transfer cases
  • New York court rejects cut down of UCC Art. 4A’s 1-year notice rule for unauthorized funds transfer
  • Ohio court denies dismissal of hotel’s $1.9 million “theoretical” crime loss
  • FinCEN Advisory highlights cybercriminals exploiting COVID-19 pandemic for funds transfer fraud
June 2020   Banking & Insurance Review
  • D.C. law firm victim of email wire fraud fails to sufficiently plead bank aiding and abetting
  • Illinois Supreme Court holds non-bank entity is a “bank” under UCC Art. 4A
  • Receiving bank in Ohio funds transfer case allowed questionable damages offset
  • 11th Circuit holds beneficiary’s bank not liable for funds transfer fraud despite discrepancies
  • Bank sanctioned in Minnesota for spoliation of electronic evidence
  • Conflicting results in recent funds transfer coverage cases in Virginia
  • Cybercriminals exploiting COVID-19 pandemic for funds transfer fraud
  • L&R presented at American Bar Association Fidelity & Surety Mid-Winter Conference in New York
June 2014   Litigation & Regulatory Report:
  • L&R obtains summary judgment for PNC Bank in Maryland $5 million banking suit
  • The future of payments fraud/counterfeit cashier’s checks
  • New York Court of Appeals approves reduction of UCC one-year notice period for reporting check fraud to 14 days
  • More federal decisions highlight need to invoke original document defense in financial institution bond cases
  • Eighth Circuit upholds ruling in favor of bank in malware wire case where customer refused security procedures and allows attorneys’ fees
Nov. 2013   Litigation & Regulatory Report:
  • Practicing Safe Cyber: National Institute of Standards and Technology issues
  • “Preliminary Cyber-Security Framework” for public comment
Sept. 2013   Litigation & Regulatory Report:
  • Bank regulators on cyber security: new fraud avoidance guidelines
  • Missouri malware wire transfer case results in summary judgment
  • Check fraud update: multiple payee checks in Maryland and elsewhere
  • Michigan financial institution bond (FIB) cases: original document defense must be timely invoked
  • Fraud on the court update: more evidentiary fraud decisions
  • Trade secret damages
  • Government contracts update: enforcing teaming agreements
Jan. 2011   Litigation & Regulatory Report:
  • Malware, fraudulent electronic funds transfers, and the role of banking industry regulations
  • Loan loss coverage investigations: what documents are relevant
  • Loan loss coverage for fake collateral – the overlooked “original” element
  • Check fraud update: bank policies and investigation held discoverable in counterfeit check scam
  • Financial Reform Act mandates extensive new regulation of banks and financial institutions
Jan. 2010   Litigation & Regulatory Report:
  • Unauthorized electronic funds transfers by banking malware
  • Check fraud warranty rights override bank negligence
  • Proper application of contract and tort limitations in actions against auditors and other professionals
  • Fraud on the court: the courts’ inherent power to sanction evidentiary fraud
  • The new normal in banking and financial services
Jan. 2009   Litigation & Regulatory Report:
  • Maryland UCC warranty claim in padded payroll scheme
  • Washington altered check case
  • Auditor liability: the “audit interference” rule and materiality
  • Courts recognize account opening liability in UCC cases
  • Fictitious vendor/check fraud schemes
  • UCC check fraud litigation: more traps for the unwary
  • Beyond traps for the unwary: recognizing discovery often yields a treasure trove
June 2008   Litigation & Regulatory Report:
  • U.S. Supreme Court declines to address widening split under Foreign Sovereign Immunities Act, for now
  • Indiana Supreme Court recognizes relevance of account opening, and affirms claim under UCC § 3-406
  • Refiled Pennsylvania $6 million check fraud case involving relationship between bank and customer
  • Connecticut court permits longer of contract and tort limitations in action against Big-Four auditors
  • “Effective indorsement” provisions of revised UCC §§ 3-404, 3-405 and the comparative fault allocation rules
  • Defending warranty claims: a high-risk game for depositaries
  • U.S. Supreme Court holds participants in 401(k)’s can sue for breach of fiduciary duties in individual accounts
June 2007   Litigation & Regulatory Report:
  • Altered v. counterfeit checks – recent circuit split affects allocation between drawee and depositary banks, and possibly liability under check 21
  • Appeals ruling that a depositary owes no duty under UCC to non-customers on account opening vacated, pending decision by Indiana Supreme Court
  • Banker dishonesty: recent cases illustrate bank and insurer defenses
  • Statute of limitation defenses to check fraud claims and recent cases tolling the limitations period
  • Update on strict liability for wire transfers
  • Fidelity coverage claim of German subsidiary withdrawn – importance of principal’s personnel file for determining prior acts exclusion
  • Second generation anti-money laundering software seeks to improve bank compliance
Sept. 2006   Litigation & Regulatory Report:
  • U.S. Supreme Court resolves conflict to confirm access for national banks to federal courts
  • Indiana court joins majority rule that UCC § 3-406 creates a cause of action, but strikes out on its own in holding a depositary owes no duty under UCC to non-customers on account opening
  • Wire transfers: a trap for the unwary can overlook strict liability
  • More traps for the unwary: UCC claims and the proper bank
  • Recent Illinois and Pennsylvania cases illustrate comparative negligence allocation in check fraud cases
  • UCC Warranty rights: frequently powerful yet overlooked tool in check fraud cases
  • FI bond coverage of check fraud claims: the applicability of UCC defenses
  • Alabama, Georgia courts reach different results on depositary bank use of drawee defense under UCC § 4-406
Jan. 2005   Litigation & Regulatory Report:
  • L&R tries $20 million Winstar case in U.S. Court of Claims
  • N.J. check case shows bank exposure despite comparative negligence
  • Maryland counterfeit check case involving drawee automated processing defense
  • Automated ATM deposit processing defense
  • Texas High Court reaffirms UCC comparative negligence rules do not allow allocation to intentional tortfeasors
  • Beware California one-year statute for most drawee claims
  • Courts allow cutbacks of 30-day and 1-year rule defenses
  • Overlooked action for aiding breach of fiduciary duty
Aug. 2004   Litigation & Regulatory Report:
  • Colorado new account fraud results in bank liability despite employer negligence
  • Courts continue trend to find cause of action under Rev. UCC § 3-406
  • Courts limit allocation of comparative negligence liability under Rev. UCC § 3-406 to the bank and the insured
  • N.J. claim involving altered check deposited in London
  • Nebraska securities brokerage loss illustrates bank exposure under comparative liability regime
  • Changing face of money laundering and its rules
Sept. 2003   Litigation & Regulatory Report:
  • Federal courts in Louisiana and Maryland find new cause of action under UCC § 3-406
  • N.Y. case involving large altered check
  • Ohio case shows high recovery possible early on despite comparative negligence
  • D.C. Court of Appeals affirms jury verdict for contribution
  • Large recovery in cross-border engineering fraud action in Kentucky
  • Moving the goal posts on director & officer liability
  • Treasury announces money laundering regulations for real estate transactions
Aug. 2002   Litigation & Regulatory Report:
  • L&R defends claims against South Dakota credit card issuer
  • New York hospital scheme involving bank and auditor exposure
  • New Jersey padded payroll scheme illustrates bank exposure under comparative liability regime
  • Classic bank liability in Maryland for opening fictitious corporate accounts
  • Update on deposit agreements implicating subrogation rights
  • Malicious litigation: too much malice can cause liability for damages, including punitive damages
  • Winstar courts pick up pace in issuing liability rulings
  • New and proposed money laundering regulations extend to insurers and brokers
Oct. 2001   Litigation & Regulatory Report:
  • Pennsylvania jury verdict demonstrates auditor exposure for check fraud, regardless of materiality
  • Bank services agreements implicating customer fidelity insurance
  • Jury verdict for contribution in the District of Columbia
  • Appeals court sets “fair and reasonable approximation” standard for proving damages in Winstar-related cases
  • Reduced oversight and prosecution of non-terrorist money laundering since September 11
  • Maryland case demonstrates auditor liability for check fraud
  • SAS 82 audit standards for detecting fraud enhances recovery prospects as to auditors for losses after 1997
  • Arkansas case shows liability under revised UCC comparative negligence standard
  • International litigation turns on state law time limits
  • The Supreme Court’s recent decisions: implications for discrimination claims in terminating employees
  • Fraud and conversion trial verdict in the District of Columbia
  • Law enforcement steps announced to speed recovery of the proceeds of offshore money laundering
March 2001   Litigation & Regulatory Report:
  • $15.4 million Virginia check fraud scheme
  • Arbitration clause in audit engagement removes general right to discovery, including of audit work papers
  • SEC task forces target manipulation of financial information and negligent audits
  • New Jersey Supreme Court redefines bad faith under the Uniform Fiduciaries Act
  • Long-arm jurisdiction in cases against officers and banks
  • Avoiding lender liability disputes
  • Insurance fraud cases reflect bases for voiding policy or denying coverage
  • International “two-cycle” money laundering
Nov. 1999   Litigation & Regulatory Report:
  • Recent Texas case illustrates UCC drawer action
  • Maryland litigation demonstrates the professional liability of auditors