By NEMS Daily Journal
BATON ROUGE, La. – A civil suit by 86 defrauded investors was certified by a judge Wednesday as a class action against Louisiana’s regulator of financial institutions and a Pennsylvania company that compiled customer financial statements on behalf of convicted swindler Robert Allen Stanford.
The Baton Rouge Advocate reported that the ruling by state District Judge R. Michael Caldwell could open the door for some 1,000 investors damaged by Stanford’s fraudulent $7.2 billion scheme to join the suit. Those people now have the option to join the original plaintiffs in seeking judgments against the Louisiana Office of Financial Institutions, or OFI, and the financial services firm of SEI Investments Co.
If investors win that suit, OFI and SEI could share liability for as much as $1 billion in losses in Louisiana, according to estimates by their attorneys.
SEI took investment-performance information from Stanford, now serving a prison term of 110 years, and used it for financial statements that went to investors. But both the Pennsylvania firm and OFI deny failing any obligations to investors.
The judge noted his decision merely opens the door for more defrauded investors to join the lawsuit against OFI and SEI, The Advocate wrote. Additional litigation will be needed to determine whether those investors are entitled to recover any money from the two defendants for allegedly failing an obligation to warn them of indicators of fraud on Stanford’s part.
Phil Preis, lead attorney for the plaintiffs, said Caldwell’s ruling “affords the people of Louisiana their day in court.” Preis said his clients “are overjoyed.”
Both the Securities and Exchange Commission and the U.S. Attorney’s Office in Houston alleged in 2009 that Stanford’s operations were fraudulent from the beginning.
Federal judges in Dallas and Houston have since agreed with that assessment.
But those court rulings have yet to benefit any defrauded investors.