The Uncertain Fiduciary Duty of Investment Banks

October 16, 2008
Courts have reached opposite conclusions on whether investment banks owe a fiduciary duty to their clients in addition to any duties set forth in a contract between an investment bank and its client. For example, a recent opinion made by the U.S. Court of Appeals for the Seventh Circuit determined that investment banks’ duties toward their clients under Illinois law derive solely from the parties’ contracts. This update summarizes the varying court decisions and provides some practical advice regarding how investment banks can establish evidence that they do not owe a fiduciary duty to their clients.