Financial services litigation—USA—Q&A guide
Financial services litigation—USA—Q&A guide

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Financial services litigation—USA—Q&A guide
  • 1. What are the most common causes of action brought against banks and other financial services providers by their customers?
  • 2. In claims for the mis-selling of financial products, what types of non-contractual duties have been recognised by the court? In particular, is there scope to plead that duties owed by financial institutions to the relevant regulator in your jurisdiction are also owed directly by a financial institution to its customers?
  • 3. In claims for untrue or misleading statements or omissions in prospectuses, listing particulars and periodic financial disclosures, is there a statutory liability regime?
  • 4. Is there an implied duty of good faith in contracts concluded between financial institutions and their customers? What is the effect of this duty on financial services litigation?
  • 5. In what circumstances will a financial institution owe fiduciary duties to its customers? What is the effect of such duties on financial services litigation?
  • 6. How are standard form master agreements for particular financial transactions treated?
  • 7. Can a financial institution limit or exclude its liability? What statutory protections exist to protect the interests of consumers and private parties?
  • 8. What other restrictions apply to the freedom of financial institutions to contract?
  • 9. What remedies are available in financial services litigation?
  • More...

Financial services litigation—USA—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to financial services litigation in USA published as part of the Lexology Getting the Deal Through series by Law Business Research (published: June 2020).

Authors: Herbert Smith Freehills LLP—Jonathan Cross; Michael Kelly; Scott Balber

1. What are the most common causes of action brought against banks and other financial services providers by their customers?

Breach of fiduciary duty, negligence, fraud or misrepresentation and, for broker-dealers, suitability and failure to supervise claims are the most common causes of action where customers bring claims against banks or other financial institutions. Those claims may be brought before the courts or, for broker-dealers regulated by the Financial Industry Regulatory Authority (FINRA), before a FINRA arbitral panel. Banks, also, face litigation brought by borrowers in some circumstances, such as where a bank has declined to make further advances under a credit facility and the borrower contends that advances were contractually required. FINRA data for 2019 (applicable only to broker-dealers) reflects the following categorisation of FINRA arbitral disputes involving a FINRA member firm:

Disputes by typeCases filed
Breach of fiduciary duty2,053
Negligence1,826
Failure to supervise1,731
Misrepresentation1,688
Suitability1,580
Breach of contract1,563
Fraud1,499
Omission of facts1,468
Violation of blue-sky laws657
Manipulation1,688
Elder abuse207
Unauthorised trading197
Churning167
Errors – charges98
Margin call88

2. In claims for the mis-selling of financial products, what types of non-contractual duties have been recognised by the court? In particular, is

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