The BMO Bank of Montreal logo is seen on the BMO Nova Centre, housing their Atlantic Canadian headquarters and support services, in Halifax on Tuesday, April 2, 2019. THE CANADIAN PRESS/Andrew Vaughan
TORONTO – BMO Financial Group says it will record a $1.12-billion provision after a U.S. jury found it liable for a Ponzi scheme alleged to have been facilitated by a bank it bought.
Toronto-based BMO says a jury awarded damages of US$564 million against its U.S. subsidiary BMO Harris Bank N.A., while possible interest charges from the alleged actions between 1999 and 2008 would boost the cost further.
The bank says it will appeal the decision to the U.S. Court of Appeals for the Eighth Circuit, along with filing post-trial motions to reverse the verdict or reduce the damages.
BMO says it is disappointed with the verdict and that it has strong grounds for appeal.
It says that because of prior settlements, it’s entitled to recover about 21 per cent of damages. After taxes, the bank expects to take a charge of $830 million in its fourth quarter because of the ruling.
The bank acquired Marshall and Ilsley Bank in 2011, which is alleged to have facilitated the scheme carried out by Thomas J. Petters and others. Petters was convicted in 2009 of orchestrating the US$3.65-billion scheme.
This report by The Canadian Press was first published Nov. 9, 2022.
Companies in this story: (TSX:BMO)
