The heirs of the founders of the Standard Register Company have taken Fifth Third Bank to court, charging that it failed to diversify their trust funds properly.

The family claims that the holdings in their trusts were overly concentrated in the shares of Standard Register, the once prominent publicly listed company that went bankrupt in 2015.

Bloomberg News

In the ongoing case, the family blasts Fifth Third, which served as trustee, for breaching its fiduciary duty and acting with "legal malice and with reckless disregard for" their legal rights. They argue that Fifth Third should have told them that their trusts were not diversified.

As a result, the trusts, which were once allegedly worth more than $200 million, lost nearly all of their value, the family claims in court documents.

They also charge Fifth Third with "unjust enrichment," saying they did not deserve the fees they earned because they failed to prudently manage their trust assets.

Larry Magnesen, a spokesman for Fifth Third, declined comment on the pending litigation. The bank's lead attorney, Victor Walton of Cincinnati law firm Vorys, Sater, Seymour and Pease, did not return a phone message.

In court documents, Fifth Third argues that the trusts "expressly exculpated" the bank from any liability for retaining Standard Registered stock in the trusts. "Any assertion that Fifth Third should have, without authorization from all beneficiaries, reduced its holdings in Standard Register … is an assertion that Fifth Third should have disregarded the intent of the grantor and, indeed, breached its fiduciary duties," it said in its motion to dismiss the case.

In January 2016, the court denied Fifth Third's motion.

Standard Register was founded in Dayton, Ohio, in 1912 by William Sherman and his brother, John Sherman, according to court documents. The founders' two great nieces, Helen Clarke Helton and Catherine Clarke, and their great nephew, James W. Clarke, initiated the lawsuit against Fifth Third.

The family is seeking in excess of $25,000 in compensatory damages and punitive damages to be determined at trial.

The potential loss to Fifth Third could be significant as the bank included the lawsuit among the legal contingencies it disclosed in its 10-K financial filing with the SEC.

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