backOn January 19, 2023, the Pennsylvania Supreme Court explicitly recognized, for the first time, the tort of aiding and abetting fraud as set forth in Section 876(b) of the Restatement (Second) of Torts. Although this case involves a bank, it may be relevant to auditors because, as the Pennsylvania Supreme Court recognized, the cause of action for aiding and abetting fraud is routinely asserted against “secondary actors,” including “accountants.” The case involved claims by the receiver for brokerage firms against a bank that allegedly facilitated a Ponzi scheme by the owner of those firms. On discretionary review, the state supreme court reversed the grant of summary judgment on the aiding and abetting fraud claim. Rejecting arguments by the defendant and the Pennsylvania Institute of Certified Public Accountants (as amicus), the court held that aiding and abetting is a valid claim in Pennsylvania, adopting Restatement Section 876(b), which imposes liability on a defendant who “knows that the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself.” The court made clear that the scienter element of the tort requires the defendant’s actual knowledge of the underlying fraud, not merely “intentional ignorance” or constructive knowledge.
The case is Marion v. Bryn Mawr Trust Co., No. 72 MAP 2021 (Pa. Jan. 19, 2023). The plaintiff-receiver is represented by White and Williams LLP. Bryn Mawr Trust is represented by Dechert LLP and McElroy, Deutsch, Mulvaney & Carpenter, LLP. The opinion is attached.
