A Financial Industry Regulatory Authority (FINRA) panel has ordered Pershing, LLC to pay $1.4m to six investors who lost money in R. Allen Stanford’s $7.2B Ponzi scam. Pershing is a Bank of New York Mellon Corp. (BK) division. It acted as Stanford Group Co.’s clearing broker for several years.
Pershing is accused of enabling the Stanford Ponzi Fraud, including through its transfer of hundreds of millions of dollars from US investors’ securities accounts, as it continued to make money from the sales of at least $500M in fake, unregistered certificates of deposit (CDs).
Pershing also allegedly disregarded the unusual ways in which Stanford ran his operations, including the use of offshore transfers and the high compensation awarded to brokers. The unregistered CDs were issued out of Stanford International Bank, a Stanford Financial Group unit based in Antigua, and then sold by Stanford’s brokerage firm in the US.
According to the claimants in this latest Stanford investor fraud claim, Pershing had grounds for thinking that some kind of wrongdoing was taking place,but that the clearing broker ignored the signs and allowed the scam to continue. Their FINRA arbitration award includes $500K in compensatory damages to one couple, $330K to another investor, and $300K to each of the remaining three claimants. The panel found that Pershing was negligent.
Stanford Ponzi Scam
Allen Stanford is currently serving a 112-year prison sentence from his fraud crimes. More than 18,000 investors were victimized in the Stanford Ponzi Scam, most of whom have found it challenging to recover their losses. Because the fake CD’s were issued by a foreign bank, investors are not covered under the Securities Investor Protection Corporation (SIPC), which gives compensation for cash and securities that are lost in the event that a brokerage firm fails.
This is why it is so important that if you were a Stanford Ponzi fraud investor that you are represented by an experienced broker-dealer misconduct law firm that can fight to help you recover your money. This is not the kind of legal claim that you want to tackle on your own or without seasoned and knowledgeable legal help. Contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today for a free case evaluation.