In order to resolve claims that they supported notorious financier Allen Stanford’s $7 billion Ponzi scam, TD Bank and two other financial institutions have agreed to pay a total of $1.35 billion.
Toronto-Dominion Bank, also known as TD Bank, consented to pay $1.2 billion. The former Bank of Houston, Independent Bank, will get $100 million, with HSBC Holdings to pay $40 million. A court will have to approve the settlements.
Former investors claimed that the banks ignored warning signs and supported Stanford’s Ponzi scheme, one of the largest in American history. Each of the three institutions has denied wrongdoing.
What was the Ponzi scam at Stanford?
To support Stanford’s opulent lifestyle, Stanford and associates fabricated financial statements and misled regulators about their financial situation. Several investors, including pensioners and owners of small businesses, lost their entire life savings.
Stanford was detained in 2009 and was given a 110-year prison term in 2012.
Banks reject any misconduct
HSBC, Independent Bank, and TD Bank all denied responsibility for any misconduct.
The Canadian bank stated in a news statement on Monday that it “mainly supplied correspondent banking services to Stanford International Bank Ltd and maintains that it operated properly at all times.” “TD opted to resolve the dispute to avoid the inconvenience and ambiguity of pursuing a protracted court proceeding,” the statement reads.
In its defence, TD Bank cited a prior Canadian trial that had found no responsibility.
In a Monday financial statement, Independent Banks stated that it reached a settlement “to minimise the expense, dangers, and distraction of prolonged litigation.”
HSBC expressed its satisfaction at having “settled this dispute, which pertains to matters over a decade old, with no admission of any culpability or wrongdoing” in an email.
What happens to the money?
If the agreements are accepted, the receiver in charge of recouping Stanford investors’ funds is expected to receive more than $2.7 billion.
Kevin Sadler, a partner at the law firm Baker Botts and the lead attorney for receiver Ralph Janvey and the Official Stanford Investors Committee, declared that the recovery was “nothing short of phenomenal.” We eagerly anticipate swift settlement approval and giving these desperately needed money to the Stanford victims.