Bank of Montreal BMO-T faces a multibillion-dollar lawsuit in the United States related to one of the biggest Ponzi schemes in history. Its shockingly bad behaviour in court could put its shareholders at greater risk of footing the bill if it loses. And neither of these things are well-known to those shareholders.
Many Canadians are in the dark about this because BMO only began to disclose information about the lawsuit – which it inherited through the purchase of a U.S. bank – in its securities filings in the second half of 2021, nine years after the suit was filed.
The lagging and limited disclosure reveals little about what seems to be a big problem with the way the bank is conducting itself in the U.S. legal system. BMO has been sanctioned twice in the past decade by U.S. judges for failing to turn over evidence to opposing parties in lawsuits, with judges in both cases using the word “lie” to describe what BMO had done.
It’s entirely possible that BMO could prevail in the suit, or emerge with minimal financial damage. But its behaviour should give its shareholders pause, given that it is now buying California-based Bank of the West, adding the potential for more U.S. business disputes.
In a statement, spokesperson Paul Gammal said “BMO’s reputation is built on its commitment to high standards of business conduct and financial disclosure.” He also said BMO “continues to vigorously defend itself against unmeritorious allegations about the banking…
