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