On April 14, the U.S. Court of Appeals for the Eleventh Circuit held that a custodian bank had no duty under New York or Florida law to identify or alert a customer to fraudulent transactions directed by the customer’s investment advisor. Lamm v. State Street Bank & Trust, No. 12-15061, 2014 WL 1410172 (11th Cir. Apr. 14, 2014). A bank customer sued his bank for breach of contract, breach of fiduciary duty, negligence, and several other common law claims, alleging the bank had a duty to notify him that the securities held by the bank were worthless. The court determined that, although the bank held the assets and could execute certain administrative transactions without prior authorization, transactions beyond these administrative roles were carried out at the direction of the customer’s investment advisor. Accordingly the bank had no responsibility for supervising investments and assumed no liability for losses except those it caused through negligence or willful misconduct. The court held that the customer’s breach of contract and negligence claims failed because (i) the custody agreement provided the bank no decisionmaking role in investments; (ii) the bank had contractual authority to rely on the investment advisor’s instructions; and (iii) the customer failed to demonstrate that the bank had a duty to ensure the investment instruments were valid or to verify their market value. The court further held with regard to the customer’s other claims that (i) the fact that certain securities had facial defects does not raise a plausible inference that the bank knew of the investment advisor’s wrongdoing, and cannot support a claim for aiding and abetting fraud; (ii) the custody terms established an arm’s length agreement with limited obligations and did not establish special circumstances on which a fiduciary duty claim can be made; and (iii) the customer’s negligent misrepresentation claim failed because the customer did not establish that the bank intended to induce him to rely on its alleged representations as to the validity of his securities.