- Case involves Texas financier Allen Stanford, convicted in a $7 billion Ponzi scheme
- Insurance brokers, financial services companies, law firms associated with him were sued
Investors who say they were duped by a financier involved in a multibillion-dollar Ponzi scheme can proceed with their lawsuits, after the Supreme Court on Wednesday ruled in their favor.
The 7-2 decision is a further legal setback for Texas financier Allen Stanford and his business associates over the sale of about $7 billion in certificates of deposit.
Allen was sentenced to 110 years in prison in June 2012 for orchestrating the $7 billion fraud, one of the largest in U.S. history.
At issue was whether the federal Securities Litigation Uniform Standards Act of 1998 precluded any class-action lawsuits in state courts, alleging a misrepresentation. Former investors seeking to recover losses are suing insurance brokers, financial services companies and law firms associated with Stanford.
The court majority said its opinion will not hamper the federal government's ability to go after financial fraud in its separate criminal prosecutions.
The consolidated cases are Chadborne & Parke LLP v. Troice (12-79); Willis of Colorado, Inc. v. Troice (12-86); and Proskauer Rose LLP v. Troice (12-88).