TD Bank Agrees to Pay $1.2B to Settle Allen Stanford Ponzi Scheme Lawsuit

Toronto-Dominion Bank (TSX: TD), along with two other banks, agreed to settle a lawsuit stemming from fraudster investor Allen Stanford’s Ponzi scheme.

TD Bank, HSBC Holdings, and Independent Bank Group have agreed to pay a combined $1.35 billion to resolve litigation by former investors of Allen Stanford. The investors accused the banks of contributing to Stanford’s Ponzi scheme, which involved the sale of fraudulent high-yielding certificates of deposit, ultimately defrauding around 18,000 investors of $7.2 billion. The banks’ settlements will avert a trial that had been scheduled for Monday in Houston federal court, with the funds going to a court-appointed receiver who is repaying Stanford’s victims.

TD will pay $1.2 billion, HSBC will pay $40 million, and Independent Bank Group, formerly Bank of Houston, will pay $100 million. Two other defendants, France’s Societe Generale and Mississippi-based Trustmark, settled for $157 million and $100 million, respectively, earlier this year.

Stanford’s Ponzi scheme was at the time considered the second largest after that of Bernard Madoff, and he was sentenced to 110 years in prison in 2012. He was convicted of defrauding around 18,000 investors and using their money to fund a lavish lifestyle and risky investments. TD denied liability and said it settled to avoid the distraction and risk of further litigation, and HSBC and Independent Bank are also denying any wrongdoing.

Information for this briefing was found via Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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