Bank of America Loses Effort to Dismiss Investor’s Lawsuit

May 23, 2022 by Tom Ramstack
Bank of America Loses Effort to Dismiss Investor’s Lawsuit

WASHINGTON — A federal court ruled last week that Bank of America can be sued over an investment manager’s decision to sell a customer’s stock in what appears to be a sign of the times as the U.S. economy tilts toward recession.

Federal courts report a wave of shareholder lawsuits while the stock market continues sliding. It’s down 19% so far this year, according to the Standard & Poor’s index.

Many economists are predicting more troubling trends as gasoline prices reach record levels, the COVID-19 pandemic continues and the war between Russia and Ukraine impedes supply chains.

As stock values fell during the worst of the pandemic in early 2020, a Bank of America investment manager sold the stock of client Robert Goodrich, resulting in a $2 million loss for him.

The customer’s lawsuit said the investment manager breached his fiduciary duty by engaging in gross negligence and violations of the District of Columbia Securities Act.

Bank of America filed a motion to dismiss the lawsuit, saying the investment manager was following the client’s directions for managing his account. The investment manager was trying to convert Goodrich’s assets to cash to protect them from further losses.

The bank also argued its investment manager did not recognize his conduct was wrongful, which is required to prove a gross negligence violation of the D.C. Securities Act.

U.S. District Judge Dabney L. Friedrich denied Bank of America’s motion to dismiss, saying there was enough evidence of a fiduciary duty to justify a lawsuit.

Fiduciary refers to the legal obligation of a person or organization to protect the status or assets of other parties. Typically, a fiduciary takes care of the money of another person.

As stock values continue falling this month, a bigger question is how many more lawsuits by investors are coming soon.

So far this year, investor lawsuits are pending against online retailer Amazon, film production company Netflix and biopharmaceutical maker AbbVie.

In a settlement announced this month, financial services company Allianz agreed to pay $6 billion to investors. The company and its U.S. asset management unit are pleading guilty to fraud after several of its multibillion-dollar investment funds collapsed amid market turmoil caused by the pandemic.

In the Bank of America case, Goodrich hired Bank of America in 2014 for wealth management services for his assets, according to court documents.

Goodrich deposited “virtually all of his savings and investable assets” with Bank of America and paid regular investment management fees, the judge’s order says.

Goodrich said Bank of America breached its fiduciary duty when it sold his investments without disclosing the impact on his ability to reinvest. His lawsuit also says the stock sale was “in total contradiction” to his investment goals and advice.

“Because the above acts contradicted Goodrich’s legitimate expectations and harmed his economic well-being, Goodrich has stated a claim for the breach of fiduciary duty,” the judge wrote.

The case is Goodrich v. Bank of America NA et al., number 1:21-cv-01344, in the U.S. District Court for the District of Columbia.

Tom can be reached at [email protected] and @TomRamstack

A+
a-
  • Bank of America
  • investor's lawsuit
  • In The News

    Health

    Voting

    Litigation

    July 10, 2025
    by Dan McCue
    Federal Judge Certifies Class Action in Birthright Citizenship Case

    CONCORD, N.H. — A federal judge on Thursday barred the Trump administration from ending birthright citizenship, reviving a legal standoff... Read More

    CONCORD, N.H. — A federal judge on Thursday barred the Trump administration from ending birthright citizenship, reviving a legal standoff with the White House just days after the Supreme Court blocked federal judges from using nationwide injunctions to thwart the president's policies. Ruling from the bench... Read More

    July 9, 2025
    by Dan McCue
    Pediatricians Sue Kennedy Over ‘Unscientific Changes’ to Vaccine Policy

    WASHINGTON — The American Academy of Pediatrics and a half dozen other major medical groups sued Health Secretary Robert F.... Read More

    WASHINGTON — The American Academy of Pediatrics and a half dozen other major medical groups sued Health Secretary Robert F. Kennedy Jr. on Monday for making “unilateral, unscientific changes to federal vaccine policy” that they contend are an “assault” on science and public health. In a... Read More

    July 8, 2025
    by Tom Ramstack
    Gun Rights Groups Sue to Block National Firearms Act Enforcement

    WASHINGTON — A coalition of Second Amendment advocates is suing to invalidate gun ownership restrictions that were revised by the... Read More

    WASHINGTON — A coalition of Second Amendment advocates is suing to invalidate gun ownership restrictions that were revised by the One Big Beautiful Bill Act President Donald Trump signed July 4. The bill removes many of the National Firearms Act taxes associated with gun ownership. The... Read More

    July 8, 2025
    by Alexa Citrin
    Trump Crackdown on Pro-Palestinian Campus Activists Goes to Trial 

    BOSTON — A trial over the Trump administration’s attempts to deport international students and scholars involved in pro-Palestinian activism on... Read More

    BOSTON — A trial over the Trump administration’s attempts to deport international students and scholars involved in pro-Palestinian activism on college campuses began on Monday with the plaintiffs arguing the efforts threaten to upend free speech rights enshrined in the U.S. Constitution. “Not since the McCarthy... Read More

    July 2, 2025
    by Tom Ramstack
    Justice Dept. Appeals Court Judgment That Blocked Trump’s Law Firm Sanctions

    WASHINGTON — The Justice Department this week appealed a court judgment that blocked sanctions against the law firm of Perkins... Read More

    WASHINGTON — The Justice Department this week appealed a court judgment that blocked sanctions against the law firm of Perkins Coie in what appears to be a resumption of President Donald Trump's reprisals against lawyers who oppose his policies. The Justice Department has argued that Perkins... Read More

    June 25, 2025
    by Dan McCue
    Federal Judge Stays Freeze on Federal Funding for EV Infrastructure

    SEATTLE — A federal judge in Washington state temporarily suspended the Trump administration’s freeze of roughly $1 billion in funding... Read More

    SEATTLE — A federal judge in Washington state temporarily suspended the Trump administration’s freeze of roughly $1 billion in funding intended to help states create a network of electric vehicle charging stations and related infrastructure along major roadways. Created as part of the bipartisan infrastructure law,... Read More

    News From The Well
    scroll top