“Malpractice” is when a professional is negligent in their obligations of their profession, and injury or harm occurs as a result. While malpractice claims are common in the medical field, they are also common in the legal field. The term “banker malpractice” refers to malpractice within the finance field. If a financial professional ignores industry norms that would protect their clients from financial harm, then it is possible to file a suit for professional negligence or professional malpractice.
Bank advisors, members of bank boards, corporate directors, and investment bankers are potentially liable for financial breach of duty to their clients. “Fiduciary duty” is a common phrase heard in financial fields. It refers to an individual’s responsibility to another person or persons to handle that person’s financial matters in the most responsible way possible.
For example, merger and acquisition advisors are particularly responsible for making careful and responsible choices on behalf of customers and consumers. Even accountants can face a malpractice claim.
In many states, banking professionals can be shielded by a “business judgment rule.” It states that even if there are poor outcomes as a result of a financial decision, banking professionals are not always to blame. There are exceptions to this rule, however, like if business decisions were the result of fraud, illegal maneuvers, or choices made because they would benefit the banker.
If an exception applies, then a suit against the banking professional has a better chance of succeeding. In other words, “good faith” lending practices and banking decisions are often protected activities, even if they eventually fail and lead to a financial loss.
The punishment for banker malpractice varies from state to state. In New York, claims against banking professionals are less common because the business judgment rule is generally respected by the courts. However, actual decisions within each state also vary. A case in Georgia resulted in directors of banking institutions being held to a higher standard than directors in other industries. But other cases in Georgia created opposite rulings.
It is possible to bring a claim against a banker under the Federal Deposit Insurance Corporation (“FDIC”), a government entity created in 1993 to safeguard people’s financial investments. It is possible to sue bank directors for negligence, and the FDIC itself sometimes files malpractice claims against bank directors.
If you think you have been the victim of financial negligence, you should contact a lawyer right away, and they will help you make the best possible case.