TD Bank to pay US$1.2 billion to settle Stanford Ponzi scheme lawsuit
TORONTO –
TD Bank Group stated Monday it’s going to pay US$1.2 billion to settle a lawsuit associated to one of many largest Ponzi schemes ever orchestrated.
The financial institution, together with a number of different monetary establishments, was about to face path within the case in Texas for its alleged function within the $7 billion scheme operated by the Stanford Financial Group.
In agreeing to the settlement, TD denied any legal responsibility or wrongdoing and maintained that it acted correctly always. The financial institution stated it selected to settle the case to keep away from the distraction and uncertainty of constant a protracted authorized continuing.
TD had offered correspondent banking providers to Stanford International Bank Ltd., an offshore financial institution in Antigua, and had confronted allegations of realizing help and negligence associated to the Ponzi scheme.
In a parallel case in opposition to the financial institution in Ontario, the court docket dominated in TD’s favour. The ruling was backed up by the Ontario Court of Appeal, whereas the plaintiffs try to attraction the case to the Supreme Court of Canada.
Under the phrases of the U.S. settlement, TD has settled with the receiver, the official Stanford Investors Committee and different plaintiffs within the litigation.
TD, which is scheduled to report its first-quarter outcomes on Thursday, stated that on account of the settlement it’s going to take a cost of about C$1.2 billion after tax within the quarter.
The settlement comes as TD works its manner by two main acquisitions within the U.S., the US$13.4-billion First Horizon and US$1.3-billion Cowen Inc. offers, whereas additionally going through larger capital expectations from regulators and buyers.
National Bank analyst Gabriel Dechaine stated that whereas the settlement might push the financial institution under the capital buffer anticipated by buyers, he would not anticipate TD would want to promote shares to make up the shortfall.
The financial institution might rely both on inner capital technology, or promote down its Charles Schwab Corp. holdings to make up any shortfall, whereas if it did elect to lift fairness it could imply solely a few one per cent dilution to present shares excellent, he stated.
Barclays analyst John Aiken stated that the settlement resolves the overhang of the case and that he expects the news to be constructive for the financial institution’s outlook.
“Although the absolute dollar amount is significant, we believe that it was far less than the worst-case scenario envisioned by some in the market,” he stated in a word.
The settlement is the most recent main cost recorded by Canadian banks from U.S. lawsuits.
CIBC stated earlier in February that it could pay US$770 million to settle a lawsuit introduced in opposition to it by Cerberus Capital Management L.P. associated to finance transactions linked to the 2008 monetary disaster.
In November, BMO took a US$1.1 billion cost associated to a separate Ponzi scheme in Minnesota after a jury awarded damages of about US$564 million in opposition to the financial institution. BMO stated on the time it could attraction the choice.
The Ponzi scheme within the TD settlement was run for 20 years by Allen Stanford and concerned greater than 30,000 accounts. Stanford was sentenced to 110 years in jail for its orchestration.
This report by The Canadian Press was first printed Feb. 27, 2023.
