07/22/26

The Ohio Bankers League has secured another important legal victory for Ohio's financial-services industry.

In Bitounis v. Interactive Brokers, L.L.C., Slip Opinion No. 2026-Ohio-2268, the Supreme Court of Ohio reversed the Eighth District Court of Appeals and reinstated the trial court's dismissal of claims against Interactive Brokers. The Court held that a brokerage firm performing routine business activities for a customer after that customer unlawfully sold securities did not "participate or aid" in those sales and therefore could not be held jointly and severally liable under R.C. 1707.43(A).

The case arose from a fraudulent investment scheme in which an individual collected approximately $25 million from investors and deposited the funds into an account maintained through Interactive Brokers. After the individual lost nearly all of the invested funds through speculative trading and later died, the investors sought recovery from the brokerage firm.

The trial court dismissed the claims because the plaintiffs did not allege that Interactive Brokers played a role in soliciting investors, marketing the fund, negotiating investment terms, or selling interests in the fund. The Eighth District reversed, allowing the claims to proceed based largely on allegations that the brokerage firm should have identified warning signs through its account-opening and compliance processes.

That decision presented significant concerns for banks, brokerage firms, custodians, and other financial institutions throughout Ohio.

OBL joined the Securities Industry and Financial Markets Association in filing an amicus brief urging the Ohio Supreme Court to reverse the Eighth District. Our brief explained that financial institutions should not face potentially enormous liability merely because a customer used routine financial services while engaging in misconduct unknown to the institution.

An expansive interpretation of R.C. 1707.43(A) could have effectively transformed ordinary account-opening, compliance, custodial, payment, and transaction-processing services into participation in a customer's underlying securities fraud. It also could have encouraged plaintiffs to pursue regulated, well-capitalized financial institutions rather than the individuals who actually committed the wrongdoing.

The Supreme Court rejected that approach.

The Court explained that R.C. 1707.43(A) requires a meaningful nexus between the defendant's conduct and the unlawful sale itself. A connection to a broader investment scheme is insufficient. The alleged conduct must contribute to the solicitation, negotiation, offering, or execution of the particular securities sale to the purchaser.

The Court further held that affirmative participation in the prohibited conduct is required. Routine account setup, compliance reviews, trade execution, and other standard or automated postsale services do not become participation in an unlawful securities sale simply because those services were later used by a bad actor.

Importantly, the Court reaffirmed that a financial institution's "mere participation in a transaction," without participation or aid in the actual sale of illegal securities, does not create liability under R.C. 1707.43(A).

This is a meaningful victory not only for Interactive Brokers, but also for banks and other financial institutions operating throughout Ohio. The decision preserves the distinction between knowingly or affirmatively furthering an unlawful securities sale and merely providing routine financial services to a customer who later proves to be a wrongdoer.

It also provides needed clarity at the pleading stage. Conclusory allegations that an institution "aided" a fraud are not enough. Plaintiffs must allege facts demonstrating that the institution's conduct was tied to the actual sale of securities to the investors.

The decision continues OBL's strong record of strategically engaging in litigation that could materially affect Ohio banks. Through amicus participation and the OBL Legal Defense Fund, OBL has worked to ensure that courts understand the practical consequences that novel or expansive legal theories can have on financial institutions, their customers, and the broader economy.

Recent successes demonstrate the importance of that work. When an appellate ruling threatens to create uncertainty, impose obligations unsupported by statutory text, or expose banks to liability for ordinary business conduct, OBL can provide the courts with both legal analysis and the real-world industry perspective necessary to reach a sound result.

OBL was proud to support the successful appeal in Bitounis. We appreciate the outstanding work of our amicus counsel, Brodi J. Conover and Ryan L. Richardson of Bricker Graydon, whose advocacy helped secure this important result for Ohio's financial-services industry.

The final decision sends a clear message: financial institutions may be held accountable when they actually participate in unlawful conduct, but they are not insurers against every wrongful act committed by a customer using routine financial services.