The case involves a Ponzi scheme that had been facilitated by organizations prior to their acquisition by BMO in 2011.

Toronto/New York-listed BMO Financial Group yesterday said its BMO Harris Bank N A intends to pursue all legal means, including an appeal, after a jury awarded $564 million in a class-action suit against the bank. The suit claimed that financial entities acquired by BMO Harris had facilitated a Ponzi scheme carried out by Thomas J Petters and affiliated persons and entities.

Under accounting standards, BMO will record a provision of C$1.12 billion ($833 million), leading to an after-tax charge of C$830 million, to be recorded in its fourth-quarter results and booked in the corporate services segment, it said.

Explaining the case, BMO said Petters and others had operated a deposit account at a predecessor bank, M&I Marshall and Ilsley Bank (M&I). As previously disclosed, the lawsuit alleges that between 1999 and 2008, before it was acquired by BMO Harris in 2011, M&I (and a predecessor bank) facilitated the Ponzi scheme operated by Petters. Pursuant to a prior settlement in connection with another Petters matter, BMO Harris is entitled to recover about 21 per cent of any amount that it pays to the trustee, according to a statement from BMO Financial Group.

“BMO Harris strongly denies the plaintiff’s allegations and will continue to defend itself vigorously, including by bringing an appeal to the United States Court of Appeals for the Eighth Circuit, to contest the jury verdict and award,” the group said in a statement.

“We are disappointed with the jury’s verdict, which is not supported by the evidence or the law. We will file a number of post-trial motions with the trial judge to reverse the verdict or reduce the damages, and we intend to pursue all avenues to overturn the jury’s verdict, including appeals. We are confident that we have strong grounds for appeal,” a BMO Harris spokesperson said in a statement.