TORONTO and CHICAGO, Nov. 8, 2022
/PRNewswire/ - BMO Financial Group (TSX: BMO) (NYSE: BMO)
announced today that its subsidiary, BMO Harris Bank N.A. (BMO
Harris) intends to pursue all available legal options including
appealing the jury verdict and award in a lawsuit related to a
Ponzi scheme carried out by Thomas J.
Petters and certain affiliated individuals and entities
(collectively, Petters) that operated a deposit account at a
predecessor bank, M&I Marshall and Ilsley Bank (M&I).
The jury awarded damages of approximately US$564 million against BMO Harris in favour of
the Trustee in bankruptcy proceedings for certain Petters entities.
As previously disclosed, the lawsuit alleges that between 1999 and
2008, before it was acquired by BMO Harris in 2011, M&I (and a
predecessor bank) facilitated the Ponzi scheme operated by
Petters. Pursuant to a prior settlement in connection with
another Petters matter, BMO Harris is entitled to recover
approximately 21% of any amount that it pays to the Trustee.
BMO Harris strongly denies the plaintiff's allegations and
will continue to defend itself vigorously, including by bringing an
appeal to the United States Court
of Appeals for the Eighth Circuit, to contest the jury verdict and
award. "We are disappointed with the jury's verdict,
which is not supported by the evidence or the law. We will file a
number of post-trial motions with the trial judge to reverse the
verdict or reduce the damages, and we intend to pursue all avenues
to overturn the jury's verdict, including appeals. We are confident
that we have strong grounds for appeal," stated a BMO Harris
spokesperson.
As a result of this outcome, in accordance with applicable
accounting standards, BMO will record a provision, which includes
estimated possible pre-judgment interest net of estimated
recoveries, in the amount of CAD$1,120
million, resulting in an after-tax charge of CAD$830 million to be recorded in the fourth
quarter in the Corporate Services segment and treated as an
adjusting item.
Cautionary statement regarding forward-looking
information
Certain statements in this press release are forward-looking
statements. All such statements are made pursuant to the "safe
harbor" provisions of, and are intended to be forward-looking
statements under, the United States Private Securities Litigation
Reform Act of 1995 and any applicable Canadian securities
legislation. Forward-looking statements in this press release may
include, but are not limited to, statements with respect to the
after-tax charge BMO will record in the fourth quarter of 2022;
prejudgement interest; anticipated recovery of damages awarded
pursuant to a prior settlement in connection with a Petters'
matter; and BMO's intention to contest the jury verdict and award.
Forward-looking statements are typically identified by words such
as "will", "intend", "entitled", "and "estimate" or negative or
grammatical variations thereof.
By their nature, forward-looking statements require us to make
assumptions and are subject to inherent risks and uncertainties,
both general and specific in nature. There is significant risk that
predictions, forecasts, conclusions or projections will not prove
to be accurate, that our assumptions may not be correct, and that
actual results may differ materially from such predictions,
forecasts, conclusions or projections. We caution readers of this
press release not to place undue reliance on our forward-looking
statements, as a number of factors – many of which are beyond our
control and the effects of which can be difficult to predict –
could cause actual future results, conditions, actions or events to
differ materially from the targets, expectations, estimates or
intentions expressed in the forward-looking statements.
The future outcomes that relate to forward-looking statements
may be influenced by many factors, including, but not limited to:
the final outcome of the Petters' matter; legal and other
developments in litigation, such as the risk of judicial and/or
jury rulings or findings or any resolution of litigation that
differ from what is anticipated or expected; the timing and
determination of amounts expected to be recovered by BMO pursuant
to a prior settlement in connection with the Petters' matter; and
those other factors discussed in the "Risks That May Affect Future
Results" section, and the sections related to credit and
counterparty, market, insurance, liquidity and funding, operational
non-financial, legal and regulatory, strategic, environmental and
social, and reputation risk, in the "Enterprise-Wide Risk
Management" section of BMO's 2021 Annual Report, as updated by
quarterly reports, all of which outline certain key factors and
risks that may affect our future results and our ability to
anticipate and effectively manage risks arising from all of the
foregoing factors.
We caution that the foregoing list is not exhaustive of all
possible factors. Other factors and risks could adversely affect
our results. Investors and others should carefully consider these
factors and risks, as well as other uncertainties and potential
events, and the inherent uncertainty of forward-looking statements.
We do not undertake to update any forward-looking statements,
whether written or oral, that may be made from time to time by us
or on our behalf, except as required by law.
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly
diversified financial services provider - the 8th largest bank, by
assets, in North America. With
total assets of $1.07 trillion as of
July 31, 2022, and a team of diverse
and highly engaged employees, BMO provides a broad range of
personal and commercial banking, wealth management and investment
banking products and services to more than 12 million customers and
conducts business through three operating groups: Personal and
Commercial Banking, BMO Wealth Management and BMO Capital
Markets.
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SOURCE BMO Financial Group