A federal appeals court has upheld a decision in favor of several insurers, including Lloyd & # 39; s London, and an asset management company linked to the large Ponzi scheme once run by Allen Stanford, the Texas financier who now serves a 110- year imprisonment
The Fifth U.S. Circuit Court of Appeals in New Orleans upheld a U.S. District Court decision in Baton Rouge, Louisiana stating that neither Oaks, Pennsylvania-based SEI Investments Co. or the insurers were liable in connection with the Ponzi scheme, according to Friday's decision in Robert C. Ahders v SEI Private Trust Co., Pennsylvania Corp. et al.
Insurers designated as defendants in the case were: CNA Financial Corp. unit Continental Casualty Co .; Some insurers at Lloyds of London; Axa XL unit Indian Harbor Insurance Co .; Hartford Financial Services Corp. unit Nutmeg Insurance Co .; Hamilton, Bermuda-based Allied World Assurance Co .; and Arch Capital Group Ltd., the Arch Insurance Group.
Mr. Stanford's plan involved selling fraudulent deposit certificates to investors through his company, Stanford International Bank Ltd. The complainants in the disputes are investors who purchased SIBL deposit certificates as part of their individual pension accounts. The IRA was held by Stanford Trust Co.
In order to perform its operational functions, STC contracted with SEI, which according to its contract was responsible for, among other things, sending bank statements to customers. The agreement specified that the "legal relationship" between SEI and STC was intended to be an independent contractor.
Investors claimed that SEI was liable for STC's violations under the Louisiana Securities Act "controller control provisions". The US District Court in Baton Rouge granted both SEI and the insurers a summary judgment dismissing the dispute.
The decision was confirmed by a unanimous panel court with three judges. "Investors' sole assertion is that SEI is responsible for STC's primary breaches of Louisiana Securities Law as a controlling entity," the decision states. "As the district court acknowledged, the agreement between STC and SEI is strong evidence that SEI could not control STC's primary infringements."
"Investors do not refute this evidence and acknowledge that they do not" claim that SEI priced SIBL CDs. Nor do the investors claim that SEI was involved in selling the SIBL-CID or holding the SIBL-CD in IRAs.
primary violations due to various aspects of SEI's role as a service provider for STC. "
" A reasonable jury could not conclude that SEI is liable as a controller only because STC committed primary violations of SEI's services, "the appeals panel said in confirming the district court's grant of a summary judgment.
The parties to the dispute did not return the request for comment.
In June 201