On November 3, 2026, the United States Court of Appeals for the Second Circuit affirmed a lower court's decision to dismiss John A. Mansour's civil RICO claims against Morgan Stanley and its affiliates. The court found that Mansour's allegations of fraud were barred by the Private Securities Litigation Reform Act and that his state-law claims were untimely. This ruling impacts Mansour and potentially others who may have similar claims against financial institutions.

The case, Mansour v. Morgan Stanley, docket number 26-600, centers around allegations made by Mansour that several investment banks, including Morgan Stanley, participated in a racketeering scheme to steal money from his brokerage accounts. Mansour claimed that his brother and other family members, along with a lawyer, formed an enterprise to launder and convert his funds through two distinct schemes between 1998 and 2004.

The first scheme, referred to as the “DELIVER” scheme, involved the unauthorized movement of approximately $20.5 million worth of Mansour's Intermedia stock out of his account. The second scheme, known as “Netpliance,” allegedly involved laundering money through trades in Netpliance, Inc. stock, a company where Mansour's brother was an insider. Mansour argued that Morgan Stanley was complicit in these activities, which led to his financial losses.

The case reached the Second Circuit after the United States District Court for the Southern District of New York dismissed Mansour's claims with prejudice. The district court ruled that the RICO claims were barred by the RICO Amendment, which prohibits using conduct that would be actionable as securities fraud to establish a RICO violation. The court also determined that Mansour's state-law claims were filed too late.

The Second Circuit judges, Susan L. Carney, Michael H. Park, and Sarah A. L. Merriam, reviewed the case and agreed with the lower court's findings. They noted that the RICO Amendment specifically states that no person may rely on conduct that would have been actionable as fraud in the purchase or sale of securities to establish a RICO claim. The judges emphasized that Mansour's allegations fell squarely within this prohibition.

The court ruled, "The RICO Amendment thus 'bar[s] civil RICO claims based on allegations of securities fraud.'"

Furthermore, the judges highlighted that Mansour's attempts to recharacterize his claims as conversion and money laundering did not circumvent the RICO Amendment's restrictions. They pointed out that the amendment focuses on the conduct alleged, not the labels used to describe it. The judges stated, "The RICO Amendment turns on the conduct alleged, not the label attached to it."

In addition to the RICO claims, the court examined Mansour's state-law claims, which included fraud, breach of fiduciary duty, conversion, and unjust enrichment. The judges found that all these claims were untimely. Under New York law, a fraud claim must be filed within six years from when the cause of action accrues or within two years from when the plaintiff discovers the fraud. The court ruled that Mansour was on inquiry notice of the alleged fraud as early as 1999 and 2004, which meant he could not use the two-year discovery rule to extend the statute of limitations.

The court noted, "His own allegations foreclose that showing. They establish that he was on inquiry notice of the DELIVER scheme by 1999 and of the Netpliance scheme by 2004."

The judges also addressed Mansour's request to amend his complaint, which the district court denied. The Second Circuit found that the request was insufficient and that any amendment would be futile due to the fundamental legal barriers already in place. The court agreed with the lower court's conclusion that the RICO claims were barred and the state-law claims were untimely.

This ruling has significant implications for Mansour and others who may consider pursuing similar claims against financial institutions. It underscores the challenges plaintiffs face when alleging securities fraud and attempting to invoke RICO statutes. The court's decision reinforces the importance of timely filing claims and adhering to the specific legal requirements outlined in both federal and state laws.

Looking ahead, it remains unclear whether Mansour will seek further legal recourse or if there are any related cases pending. The court's ruling effectively closes the door on this particular case, but it may pave the way for future litigation involving similar allegations against financial institutions.