HSBC wins UK Supreme Court case over $141 million lawsuit
Prosecutors say financier Stanford sold fraudulent certificates of deposit
HSBC yesterday defeated a £116 million ($141 million) lawsuit in a London court over allegations the bank should have refused to make payments for convicted financier Allen Stanford.
The liquidators of Stanford International Bank argued HSBC missed warning signs that the Antigua-based lender was a fraud before it ultimately collapsed in February 2009.
In 2012, Stanford was sentenced to 110 years in prison in the United States for running a $7 billion Ponzi scheme affecting approximately 18,000 former investors.
Prosecutors said Stanford sold fraudulent high-yielding certificates of deposit through Stanford International Bank and used investor money to make risky investments and fund a lavish lifestyle in the Caribbean.
The liquidators brought a civil case in London to recover £116 million, which was paid out of Stanford International Bank’s accounts with HSBC, before being paid to Stanford International Bank’s customers in redemption payments and interest.
Thrown out
Their lawsuit was thrown out by the Court of Appeal last year and, yesterday, the United Kingdom’s Supreme Court dismissed the liquidators’ appeal by a four-to-one majority.
Announcing the court’s decision, Judge Vivien Rose said the payments “do not amount to a recoverable loss because the payments made relieved Stanford International Bank of £116 million worth of its contractual liabilities”.
She added that the bank’s assets would have been the same if the payments were not made because “it would have £116 million more in cash but it [would have] owed £116 million more in debt”.