The 2nd Circuit's opinion in In re Sharp Int'l Corp. gave lenders comfort that in extricating themselves from relationships with borrowers they believe to be engaged in fraudulent activity they will not be held liable for failing to blow the whistle and expose the fraud. However, the circuit's recent decision in Lerner v. Fleet Bank, N.A., et al. highlights the potential liability banking institutions may face if they fail to actively monitor trust accounts maintained at their banks.
October 16, 2006 at 12:00 AM
1 minute read
The original version of this story was published on Law.Com
The 2nd U.S. Circuit Court of Appeals’ opinion in In re Sharp Int’l Corp., 403 F3d 43 (2d Cir. 2005), gave lenders comfort that in extricating themselves from relationships with borrowers they believe to be engaged in fraudulent activity they will not be held liable for failing to blow the whistle and expose the fraud.
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