LEONARD L. FREDERICK, ET AL. v. MAXWELL BALDWIN SMITH,
ET AL.
A-1620-09T2 11-09-10
Plaintiffs were defrauded by defendant Maxwell Baldwin
Smith, who convinced them to invest in a fictitious entity, and
requested that their financial contributions be paid into his
personal account with defendant Merrill Lynch, Pierce, Fenner &
Smith. After discovering the fraud, plaintiff brought this
action, which included a claim that Merrill Lynch was negligent
in failing to monitor Smith's account for indicia of fraud. The
court affirmed the dismissal of this claim due to the absence of
any relationship between plaintiffs and Merrill Lynch, thereby
extending the courts' "reluctance to impose a duty of care on
banks in respect of a total stranger," Brunson v. Affinity Fed.
Credit Union, 199 N.J. 381, 403 (2009), to brokerage firms
