Pershing is on the hook for $1.4 million to six claimants following a Finra arbitration panel decision that it helped facilitate a Ponzi scheme by R. Allen Stanford, according to news reports.
Stanford was convicted in 2012 of defrauding investors to the tune of $7.2 billion in a scheme involving certificates of deposit issued by his offshore bank in Antigua, InvestmentNews writes.
Last week, the Finra arbitrators ruled that Pershing aided and abetted Stanford by serving as his custodian and clearing firm, according to the publication.
The claimants in the case had invested in the CDs between 2006 and 2009, InvestmentNews writes.
Scott Hirsch, owner of an eponymous law firm in Boca Raton, Fla., who represented the claimants in this case, tells the publication Pershing had reason to believe that Stanford’s operation was suspicious but “put their head in the sand and let it happen.”
The original claim included 18 claimants seeking over $6 million, but the Finra arbitrators denied the claims of 12 of them without explaining why, according to InvestmentNews.
Pershing’s lawyers and spokesman weren’t available for comment, the publication writes.