Toronto-Dominion Bank agreed to pay more than US$1.2 billion to settle a lawsuit by investors claiming it aided R. Allen Stanford’s $7 billion Ponzi scheme more than a decade ago, according to a regulatory filing Monday and a court-appointed receiver.
by investors claiming it aided R. Allen Stanford’s $7 billion Ponzi scheme more than a decade ago, according to a regulatory filing Monday and a court-appointed receiver.
Including the three settlements, Stanford investors will recoup $1.6 billion from financial institutions accused of aiding the fraud. Societe Generale Private Banking said Feb. 21 it will pay $157 million, and Trustmark National Bank said in December it will pay $100 million. Neither admitted wrongdoing.
Investors alleged the banks “had actual knowledge of the wrongdoing” by Stanford, his aides and entities and “nevertheless, aided and stood by and watched” while Stanford engaged in a systematic pattern of account activities that conflicted with the company’s stated business model, according to a summary of the claims by US District Judge Kenneth Hoyt in November.
According to investors, email records from 2006 indicate Trustmark had expressed “concerns” with Stanford entities about its unusual pattern of “wire activity.” His scheme collapsed during the financial crisis in late 2008, when investors began cashing CDs at an unsustainable rate and Stanford was forced to halt redemptions. In a bid to staunch the bleeding, Stanford told nervous employees at an all-hands meeting that SIB had $5 billion in “excess liquidity,” while his controller was sending frantic texts telling him it had just $173 million on hand. In February 2009, US regulators seized Stanford’s financial empire, ending his two-decade run.
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