- BMO Financial Group (TSX:BMO) reveals the U.S. Court of Appeals has overturned a previous jury verdict related to a Ponzi scheme
- The U.S. Eighth Circuit Court of Appeals has also instructed the court to enter a judgment in favour of the bank’s U.S. subsidiary, BMO Bank National Association
- The Ponzi scheme was carried out by Thomas J. Petters and other affiliated individuals that operated a deposit account at M&I Marshall and Illsley Bank
- Shares of BMO are up 0.28 per cent to C$115.92 as of 12:37 pm ET
BMO Financial Group (TSX:BMO) was celebrating a U.S. Court of Appeals decision to overturn a previous jury verdict ordering a subsidiary of the bank to pay US$564 billion related to a Ponzi scheme.
In a news release, the financial institution also indicated that the U.S. Eighth Circuit Court of Appeals has also instructed the court to enter a judgment in favour of the bank’s U.S. subsidiary, BMO Bank National Association.
“We are very pleased with the decision of the United States Court of Appeals for the Eighth Circuit,” a BMO spokesperson said in a statement.
According to Reuters the St. Paul, Minnesota-based court overturned the November 2022 jury verdict in a 3-0 decision and ordered that the case against BMO be dismissed.
A Ponzi scheme is an investment fraud that pays existing investors with funds from new investors. The scheme was conducted by Thomas J. Petters and affiliated individuals who operated a deposit account at M&I Marshall and Ilsey Bank.
Petters is currently serving a 50-year prison term after his 2009 conviction on criminal counts including fraud and money laundering.
Thanks to the reversal, the bank stated it will be able to reverse its current provision of C$1.19 billion, which includes accrued interest, for the case and recover C$875 million after tax.
BMO anticipates recording the reversal in its Q4 2024 financial results, which will be reported early next year.
BMO Financial Group is the eighth largest bank in North America by assets and provides a range of personal and commercial banking, wealth management, global markets and investment banking products and services to 13 million customers across Canada and the United States as well as select global markets.
Shares of BMO are up 0.28 per cent to C$115.92 as of 12:37 pm ET.
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