Bank of America Loses Motion To Dismiss Investor’s Lawsuit

WASHINGTON -- A lawsuit in the District of Columbia is proceeding against Bank of America after a federal judge declined to dismiss the claim by an investor who lost money when an investment manager sold his stock.

The lawsuit 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 percent 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.

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

He 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.

For more information, contact The Legal Forum (www.legal-forum.net) at email: tramstack@gmail.com or phone: 202-479-7240.