US Supreme Court to rule on fiduciary duty, bank fraud

[JURIST] The US Supreme Court [official website] granted certiorari in two cases on Friday. First, the court will hear Fifth Third Bancorp v. Dudenhoeffer [SCOTUSblog backgrounder], a case in which the court will consider whether it is necessary to allege that Fifth Third [corporate website], acting as a fiduciary of an employee stock ownership plan, abused its discretion in order to overcome a presumption that Fifth Third's investment decisions were reasonable. On appeal from the US Court of Appeals for the Sixth Circuit [official website], the plaintiffs are employees of the financial institution, alleging that the bank and officers in charge violated their fiduciary duties [Reuters report] when put company stock in its employee retirement plan ahead of the financial crisis.

The court also agreed to hear the case of Loughrin v. United States [SCOTUSblog backgrounder]. The issue in the matter falls under the purview of the federal government's anti-bank fraud statute [text], and whether prosecution under the statute requires proof that the defendant intended to defraud the financial institution and expose it to risk of loss. There is currently a split [Reuters report] amongst federal appeals courts on the intent-to-defraud question.

 

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