First Circuit Limits Scope of “Commercially Reasonable” Security Measures and Broadens Liability of Banks for Fraudulent Transactions

On July 3, 2012, the First Circuit Court of Appeals (the “Court of Appeals”), in Patco Constru. Co. v. People’s United Bank, No. 11-2031 (1st Cir. July 3, 2012), reversed the decision of the District Court of Maine’s (the “District Court”) granting summary judgment in favor of People’s Bank regarding the implementation of “commercially reasonable security procedures” for funds transfers under Article 4A of the Uniform Commercial Code (the “UCC”).

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