Violation of Banking Industry Standard of Confidentiality Creates Liability

By Weissman, Michael L. | The RMA Journal, September 2006 | Go to article overview
Save to active project

Violation of Banking Industry Standard of Confidentiality Creates Liability


Weissman, Michael L., The RMA Journal


Sharing of credit information to contribute to the industry's overall strength is a good thing, right? Maybe not if a borrower ends up suing you for breach of confidentiality, as this case will show. (1) Ary Jewelers sued IBJTC Business Credit Corp., claiming IBJ "wrongfully" interfered with its efforts to obtain financing from another lender. The court decided IBJ had indeed interfered.

Ary Jewelers was a limited liability company and a part of the Ary Group, a multinational, billion-dollar enterprise located in the United Arab Emirates. Ary Group was headed by Abdul Razzak. For many banks reeling from SAR [suspicious activity report] anxiety, that could automatically set off alarm bells. But this story begins more than a year before 9/11.

In early 2000, Ary wanted to enter the U.S. retail jewelry business and seized the opportunity to purchase the stock of Krigel's, a privately owned, family-operated chain of jewelry stores. Krigel was in bankruptcy, so Ary executed an agreement to purchase the stock of Krigel and take it out of bankruptcy.

Foothill Capital Group had financed Krigel's both before and during bankruptcy. Ary approached Foothill for financing, but Foothill's terms for Ary were less favorable than they had been for Krigel's, so Ary approached other lenders.

IBJ provided Ary with a term sheet on January 24, 2001. Ary accepted, and the parties negotiated for a final agreement. However, no final agreement was ever reached, because IBJTC withdrew its offer after discovering a news article stating that Mr. Razzak had been charged by Pakistani authorities with paying a $10 million-dollar bribe to obtain a multi-million-dollor gold importation contract for Ary.

IBJ didn't just withdraw its offer for financing, though; it also quickly let Foothill know what was going on, and IBJ personnel even faxed copies of the articles about the bribe charges to Foothill.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Violation of Banking Industry Standard of Confidentiality Creates Liability
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?