K&S Partnership v. Continental Bank

What level of knowledge of a fraudulent scheme can lead to secondary liability by a third party when that third party's assistance was used to perpetrate the fraud?

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Penn Square bank arranged financing for high-risk energy development projects, including Eagle Petroleum Company. Plaintiffs had invested in Eagle's financing, through Penn Square Bank. Defendant Continental Bank, a large commercial bank, had also participated in financing Eagle's operations. Eagle went bankrupt and Penn Square was taken over by the FDIC. Plaintiffs sued Continental, alleging that Continental had helped fabricate the misrepresentations that Eagle had made to them in violations of securities laws. Continental had not had contact with Plaintiffs before the suit.

Case and case summary are available at: http://www.mlmlegal.com/legal-cases/K&SPartnership_v_ContinentalBank.php.

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Reference Info:Federal, 8th Circuit, Arkansas | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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