Custodian Bank Breached No Duty By Accepting Fraudulent Securites

Lamm v. State Street Bank and Trust, No. 12-15061, from SDFla

Judge Jordan, joined by Judge Martin and Senior District Judge Baylson (EDPa). 

Summary: The plaintiff hired now-disgraced trader James Tagliaferri as an investment adviser.  Tagliaferri invested the plaintiff’s money in a variety of worthless securities, and the plaintiff sued the custodian bank holding his investment account for failing to protect him from these fraudulent transactions.  The panel holds, under New York and Florida law, that the custodian bank breached no duty by accepting on behalf of its customer securities that later turned out to be fraudulent and listing those securities on monthly account statements issues to the customer.  The district court’s decision to grant the custodian bank’s Rule 12(b)(6) motion to dismiss is affirmed.

Practice Pointer: In footnote 11, the panel affirms the district court’s denial of leave to amend because the “plaintiff did not submit a copy of or set forth the substance of the proposed amendment.”  In the Eleventh Circuit, the substance of the proposed amendment must be included within, or as an attachment to, the motion to amend.