Toronto-Dominion Bank (TD Bank), HSBC Holdings and Independent Bank have agreed to pay a total of $1.35bn to settle a lawsuit accusing them of aiding disgraced financier Allen Stanford’s $7bn Ponzi scheme. The settlements will require approval from a judge. TD Bank is to pay $1.2bn, while HSBC is to pay $40m and Independent Bank will pay $100m. The three banks have denied wrongdoing, but former investors have accused them of ignoring red flags and contributing to Stanford’s scheme.
Stanford’s Ponzi scheme was one of the largest in US history, and saw Stanford and colleagues forge financial statements to help bankroll his lavish lifestyle. The scheme caused thousands of investors, including small business owners and retirees, to lose their life savings. Stanford was arrested in 2009 and sentenced to 110 years in prison in 2012.
TD Bank, Independent Bank and HSBC have all denied any wrongdoing or liability. TD Bank maintained that it had provided “primarily correspondent banking services” to Stanford International Bank Limited and had “acted properly at all times”. The bank settled the lawsuit to avoid the “distraction and uncertainty of continuing a long legal proceeding”.
Independent Bank settled the lawsuit to avoid the cost, risks and distraction of continued litigation. In an emailed statement, HSBC said that it was “pleased to have resolved this claim, which relates to matters over a decade old, with no admission of any liability or wrongdoing”.
Two other defendants in the lawsuit, Societe Generale SA and Trustmark Corp., had previously agreed to pay $157m and $100m, respectively. If the settlements are approved, the receiver responsible for recovering assets for Stanford investors is set to collect more than $2.7bn. Kevin Sadler, a partner at law firm Baker Botts and lead counsel for receiver Ralph Janvey and the Official Stanford Investors Committee, said that the recovery was “nothing short of a monumental recovery” and looked forward to obtaining approval of the settlements and distributing the funds to the Stanford victims.
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