Following the Madoff scam, twenty-six investors sued Westport National Bank seeing to recover millions lost in accounts the bank invested with Madoff’s firm. The plaintiffs alleged that the bank breached its duty to serve as custodian of the accounts and protect the accounts from fraudulent activity, WestportNow.com reports.
Judge Peter C. Dorsey (D. Conn.) determined that the plaintiffs’ case fell “within the bounds” of the Securities Litigation Uniform Standards Act of 1998. Although twenty-six investors brought the suit, Judge Dorsey (D. Conn.) found that more than 200 investors could have been part of the class. As a result, Judge Dorsey ruled that the investors could not file a class action lawsuit against the bank because the class was too large. Under SLUSA, up to 50 plaintiffs can file a securities-related lawsuit in state court. Judge Dorsey also denied the bank’s motion to dismiss and remanded the case to the Superior Court.
David Golub, who is lead counsel for many of the plaintiffs, said the ruling meant that each individual and retirement fund trustee must now bring an individual action or join in an existing action to recover their money.