The Delaware Supreme Court upheld an award of $78 million against RBC Capital Markets LLC. RBC is a Canadian investment bank. With interest, the award may now exceed $100 million.
Warner Pincus is a corporate raider. They buy up other companies. In 2011 the company acquired Rural/Metro, one of the largest ambulance companies in America. At the center of the transaction was RBC Capital.
RBC was hired to assist Rural/Metro but stood to gain fees from both parties of the transaction.
Smell a problem? So did shareholders of Rural/Metro who later sued RBC. After losing a $78 million judgment to Rural’s shareholders, the bank appealed. Now that the Delaware Supreme Court has ruled the case should be over once and for all.
In a lengthy opinion, the Supreme Court agreed with the trial court and found RBC liable for damages. In the words of the court, “Propelled by its own improper motives, RBC misled the Rural directors into breaching” its duty to shareholders.
This isn’t an isolated case. After the trial court win, other companies and shareholders filed similar claims against other banks.
Banks have a duty to their clients and their client’s shareholders. That duty includes disclosing any conflict of interest and putting the client’s affairs above the bank’s own interests.
The ruling by both the trial court and Supreme Court simply make sense. Banks, however, now fear that the floodgates have been opened.
They should be scared. We often see tangled conflicts of interest and undisclosed interests in large commercial transactions.
Few private lawyers are properly equipped to represent businesses and shareholders in lawsuits against banks. Most lender liability lawyers work in larger firms and are defense oriented. Those big firm lawyers that will sue banks often charge outrageous rates. Smaller firms that claim to take cases against banks often only have experience handling residential foreclosure defense.
We are different. We are a consortium of lawyers that represent businesses and individuals throughout the United States in high stakes cases against banks. Despite our considerable experience, we still charge reasonable, small firm rates and often will consider hybrid fee arrangements. To date we have helped our clients and the government recover billions of dollars from banks.
Need more information? Contact attorney Chris Katers at 414-777-0778 or the author of this post, attorney Brian Mahany at 414-704-6731 (direct). For a sample of the type cases we handle, visit our LenderLiabilityLawyer website.
MahanyLaw and Judge, Lang & Katers – America’s Lender Liability Lawyers