Kelley Drye Obtains Key Victory for State Street Bank
April 24, 2005
Kelley Drye obtained a significant victory for State Street Bank in an action arising out of the financial collapse of one of its former borrowers, Sharp International.

The U.S. Court of Appeals for the Second Circuit affirmed the dismissal of Sharp’s Complaint against State Street by the U.S. District Court for the Eastern District of New York. The Second Circuit held that State Street’s alleged discovery of the fraud, like any other information obtained through its own due diligence, was an asset that belonged to State Street, which had a fiduciary duty to use that information to protect its shareholders, if it legally could.

In addition, the Second Circuit affirmed the dismissal of Sharp’s fraudulent conveyance claims, holding that, even if State Street knew that the funds raised to repay the debt were fraudulently raised, the repayment to State Street was not a fraudulent conveyance.