US Supreme Court to consider Willis appeal in Stanford case
WASHINGTON (BestWire) — The US Supreme Court has accepted an appeal filed by Willis Group Holdings stemming from the insurance broker’s work for Allen Stanford, the Texas financier who is serving a 110-year sentence in federal prison for running a $7 billion Ponzi scheme.
Willis’ appeal joins those filed by two New York-based law firms that also represented Stanford prior to the federal probe into the elaborate fraud scheme he oversaw, The appeals filed by Willis, Chadbourne & Parke and Proskauer Rose are part of an effort to avoid lawsuits filed by former Stanford clients looking to recover funds lost in the Ponzi scheme.
The victims allege Willis and the two law firms should have to pay damages for their role in working with Stanford. All three deny any wrongdoing. Willis wrote in its petition to the Supreme Court that it merely assisted Stanford International Bank, the financier’s Antigua-based banking operation, in “procuring ordinary commercial insurance policies, in exchange for standard brokerage fees”. Efforts to reach Willis for additional comment were unsuccessful.
Willis and the two law firms argue the victims’ cases should be barred under a federal law that was designed to limit the ability of class actions involving fraudulent securities transactions to proceed in state courts. Their appeals point out that federal appeals courts have split over how the Securities Litigation Uniform Standards Act should be applied in similar cases. They also note similar class actions related to the massive Ponzi scheme orchestrated by Bernard Madoff were rejected under SLUSA.
The appeals filed by Willis and the two law firms have been consolidated into a single case that is expected to be argued in April and decided by the end of June when the court adjourns for the summer.
The fallout from the charges against Stanford previously raised questions of whether Lloyd’s and Arch Specialty Insurance Co. should have to cover the cost of the federal criminal case initiated by the US Securities and Exchange Commission in 2009. A federal judge handling one aspect of the legal case Stanford litigation ruled the insurers covering Stanford and other executives’ legal expenses should be cleared of that burden. The judge said sufficient evidence exists pointing to Stanford and the others committing crimes, which violates the insurers’ directors and officers policies and clears the companies from funding Stanford’s expensive defence.
Willis is the third-largest global broker ranked by 2011 total revenues, according to Best’s Review, with $3.4 billion in total revenues