Feb 27 (Reuters) – Three banks agreed to pay $1.35 billion to resolve litigation by former Allen Stanford buyers who accused them of contributing to the imprisoned financier's huge Ponzi scheme.
Canada's Toronto-Dominion Financial institution <TD.TO> can pay $1.205 billion, HSBC Holdings Plc (HSBA.L) can pay $40 million and Unbiased Financial institution Group Inc (IBTX.O) , previously Financial institution of Houston, can pay $100 million.
Cash will go to a court-appointed receiver who's repaying victims of Stanford's $7.2 billion fraud, which was uncovered in Feb. 2009, two months after the arrest of Bernard Madoff.
Stanford's Ponzi scheme was on the time thought-about the most important aside from Madoff's.
The settlements require a decide's approval.
They avert a trial that had been scheduled for Monday in Houston federal court docket, the place TD, HSBC and Unbiased Financial institution have been the final remaining defendants.
Two different defendants, France's Societe Generale SA (SOGN.PA) and Mississippi-based Trustmark Corp (TRMK.O), settled for a respective $157 million and $100 million earlier this 12 months.
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As soon as thought-about a billionaire, Stanford, 72, is serving a 110-year jail sentence after being convicted in 2012 for defrauding about 18,000 buyers.
Prosecutors mentioned he bought fraudulent high-yielding certificates of deposit by way of his Antigua-based Stanford Worldwide Financial institution, and used investor cash to make dangerous investments and fund a lavish life-style.
The receiver, Ralph Janvey, has recovered greater than $2.7 billion for Stanford's buyers.
“Given all of the challenges confronted by the receivership since 2009, that is nothing in need of a monumental restoration,” mentioned Kevin Sadler, a Baker Botts accomplice who represents Janvey and the Official Stanford Buyers Committee.
TD denied legal responsibility and mentioned it settled to keep away from the distraction and threat of additional litigation. It's going to document a C$1.2 billion (US$885 million) first-quarter after-tax cost.
The payout is “far lower than the worst-case situation envisioned by some,” and needs to be “optimistic for TD's outlook,” Barclays analyst John Aiken mentioned in a analysis word.
HSBC and Unbiased Financial institution additionally denied legal responsibility. Unbiased Financial institution expects to acknowledge a $100 million first-quarter expense for its settlement, a regulatory submitting reveals.
Reporting by Jonathan Stempel in New York and Niket Nishant in Bengaluru; enhancing by Arun Koyyur and Jason Neely
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