This case is a class action suit against a bank that allegedly aided an investment scam. An investment firm ran advertisements offering investors a sizeable tax deal on a retirement plan. However, the shares the firm ultimately offered were for a defunct company and the investors lost all of their retirement funds supported through this firm. An expert in banking with experience in trust compliance was sought to speak to the responsibility of banks to monitor and notify clients of potential scams.
Question(s) For Expert Witness
- 1. Please describe your experience in trust compliance.
- 2. What is a bank's responsibility to protect its clients and their investments in a situation like this?
Expert Witness Response E-078805
I am a financial services professional with 20+ years of treasury management experience. I have worked at the management level in either the business or technology sides at many major banks where compliance and adherence to regulatory requirements have always been of the utmost responsibility. It is up to the bank to be educated on all of the rules and ensure their systems comply with them. In my last banking role, I supported various banking investment and transaction-based products for several years. A bank’s responsibility is to adhere to all regulatory requirements and provide the necessary due diligence when with external partners to ensure they adhere to any regulatory/privacy requirements. If the agreement material provided to the customers did indeed indicate safekeeping of plan assets, then the bank is liable to have performed the necessary due-diligence and is somewhat responsible for the failed investments. I would have to investigate how closely (or not) the bank adhered to the laws in this case.