The plaintiffs filed the suit after finding out that their accounts had been hit with a significant asset loss because of the activities of the adviser, whom both had appointed to manage their accounts.

The court noted that plaintiffs David Tullis and Michael Mack were two physicians who maintained pension funds through the Toledo Clinic Employees' 401(k) Profit Sharing Plan, and that in the early 1990s, they chose William Davis of Continental Capital Corporation as their investment adviser.

In this case the plaintiffs alleged that Defendant UMB Bank:

1. breached its fiduciary duty;
2. violated ERISA;
3. was negligent in failing to warn;
4. made "bogus" investments;
5. engaged in misrepresentation and fraud; and
6. violated security laws.

The Facts

In October 1999, the U.S. Securities and Exchange Commission (SEC) entered a Temporary Restraining Order against Capital because two of its brokers were engaged in fraudulent activities, and the court noted that the plaintiffs contend that the defendant, UMB Bank, which served as the Trustee for the plan, knew of this fraud - but failed to inform them.  Subsequently, in April 2001, UMB Bank filed suit against Davis and a subsidiary of Capital on behalf of the Toledo Clinic Employees’ 401(k) Profit Sharing Plan, alleging that several investments were improper, that they had severely declined in value immediately after being purchased, or that the investments simply never took place.

However, the plaintiff’s allege that the defendant again failed to inform them of either Davis’ or Capital’s fraudulent activities.  Additionally, the court noted that the defendant UMB Bank “continued to accept and honor allegedly forged investment directives from Davis without consulting or warning the plaintiffs.”   Consequently, the plaintiffs continued to maintain their investment account with Davis.