In Rotstain v. Trustmark Nat’l Bank, plaintiffs sued banks for assisting Stanford and his entities regarding a Ponzi scheme. No. 3:09-CV-2384-N, 2022 U.S. Dist. LEXIS 10332 (N.D. Tex. January 20, 2022). Stanford and the entities under his control sold fraudulent certificates of deposit (“CDs”) issued by the Antigua-based Stanford International Bank Limited (“SIBL”). The CDs paid relatively high rates of interest, but SIBL claimed it deployed the funds raised from CD sales only in low risk, high return funds. In reality, the CD proceeds were used to finance Stanford’s own extravagant lifestyle, and to pay off previous investors. In this suit, the plaintiffs allege that the defendant financial institutions provided banking services that supported and furthered Stanford’s scheme. The defendants filed a motion for summary judgment on multiple claims, including knowing participation in breach of fiduciary duty. The court first addressed whether there was such a claim in Texas:
As its sole remaining derivative liability claim, OSIC alleges that the Defendants knowingly participated in breaches of fiduciary duty that harmed Stanford investors. The Court turns to the legal sufficiency of such a claim. Texas has long recognized a claim for knowing participation in a breach of fiduciary duty. See Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 514 (Tex. 1942). Recent decisions in state and federal courts support its continuing…
